A perfectly competitive firm is maximizing profits in the short run. This implies that the firm is earning the most economic profits possible, which
A) must be positive.
B) must be either zero or positive.
C) can be positive, negative, or zero.
D) exist at the point at which price equals total
Answer: C) can be positive, negative, or zero.
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The Federal Reserve often begins to tighten monetary policy after a trough in the business cycle because of
A) the impact lag. B) the recognition lag. C) bureaucratic indecision. D) the time necessary to get Congress to act.
Each of the following, except one, can explain why a given job pays a compensating wage differential. Which is the exception?
a. The job requires costly training. b. The job is dangerous. c. The job is in a city with a high cost of living. d. The job requires a very high level of physical exertion. e. An increase in product demand raises the demand for labor in this job.
An improvement in technology that allows workers to process twice as many insurance forms in an hour than before will cause
a. more labor to be employed because its marginal revenue product has fallen. b. an increase in insurance premiums. c. fewer workers to be employed because their marginal revenue product has decreased. d. more workers to be employed because their marginal revenue product has increased. e. fewer workers to be employed because their marginal revenue product has increased.
Poverty is most likely to decrease in which of the following situations:
A. The size of the labor force decreases. B. Population grows more rapidly than GDP. C. The population decreases and GDP stays constant. D. Population and the economic growth rate both decrease.