In the short run
A. existing firms can exit an industry.
B. all firms have costs that they must bear regardless of their output.
C. new firms can enter an industry.
D. existing firms do not face limits imposed by a fixed input.
Answer: B
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The slope of the credit demand curve from the text book implies that the:
A) higher the rate of taxation, the lower the quantity of credit demanded. B) higher the real rate of interest, the higher the quantity of credit demanded. C) higher the real rate of interest, the lower the quantity of credit demanded. D) higher the rate of taxation, the higher the quantity of credit demanded.
The principle of comparative advantage applies to
a. individuals only. b. business firms only. c. nations only. d. individuals, businesses, and nations.
Gains from trade are the:
A. increase in welfare in both countries that results from specialization and trade. B. transfer of surplus by the receiving country that results from trade. C. deadweight loss by the losing country that results from trade. D. increased skills and human capital that results from specialization and trade.
Related to the Economics in Practice on page 281: The foreign visitors to the temples of Laos are typically much richer than the local Laotians. Based on the difference in demand elasticity of foreign visitors and local visitors, the optimal strategy for the temples to maximize revenue is to
A. charge the same price to foreign visitors and to local residents. B. not charge for admission and rely instead on donations from both local residents and foreign visitors. C. charge a lower price to foreign visitors than to local residents. D. charge a higher price to foreign visitors than to local residents.