Can positive economic profits persist under monopolistic competition in the long run. Why?
What will be an ideal response?
No, because economic profits will entice new firms to enter the market. When more firms enter the market, each firm’s demand curve will shift downward. The demand curve and hence also the MR curve will be pushed down so far by the entry of new rivals that when the firm equates MC and MR in an attempt to maximize profits, it simultaneously equates price (P) and average cost (AC) so that economic profits are zero.
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April quit her job as an accountant at Ernst and Young, where she was paid $45,000 per year. She started her own landscaping business. She rents machines and tools for $50,000 and pays $10,000 as wages to her hel
A) Her accountant calculates her profit as $40,000. B) She has an economic loss. C) Her explicit cost is $105,000. D) Both answers A and B are correct. E) Both answers A and C are correct.
The U.S. dollar's effective exchange rate since 2002 has steadily weakened. However, it didn't weaken as much against ALL currencies as it did against the currencies of the major developed countries (which include the pound and the euro). This could be because:
a. the U.S. government has a strong dollar policy. b. the large trading partners, China and Japan, did not allow their currencies to appreciate greatly against the U.S. dollar. c. the rate of appreciation is always somewhat greater than the rate of depreciation. d. the United States does not trade with some nations, so the effective rate is biased.
Explain what happens in the extended aggregate demand and aggregate supply model when there is a recession.
What will be an ideal response?
Mutual funds give individual investors a low-cost way to diversify
Indicate whether the statement is true or false