A firm earns a profit if
A. price equals marginal cost.
B. total revenue exceeds the total cost of production.
C. price is less than the total cost of production.
D. total revenue equals total fixed costs.
Answer: B
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The amount of consumption expenditure that takes place when income is zero is
A) called induced consumption. B) called zero-based consumption. C) equal to zero. D) called autonomous consumption. E) equal to saving.
In the long run, the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is to
A) continue its efforts to differentiate its product. B) raise its price. C) lower its price. D) do nothing, because it will inevitably experience a decline in profits.
It is important to distinguish between the privately held portion of the national debt and the portion held by government agencies and the Federal Reserve System because:
a. the government will not have to repay the privately held debt. b. only the privately held debt creates a net interest liability for the federal government. c. the privately held debt does not create a net interest liability for the federal government. d. taxes will have to be raised in order to pay the interest on the debt held by the Federal Reserve system.
For a long while, electricity producers were thought to be a classic example of a natural monopoly. People held this view because
a. the average cost of producing units of electricity by one producer in a specific region was lower than if the same quantity were produced by two or more producers in the same region. b. the average cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more produced in the same region. c. the marginal cost of producing units of electricity by one producer in a specific region was higher than if the same quantity were produced by two or more producers in the same region. d. electricity is a special non-excludable good that could never be sold in a competitive market.