In the short run, if a perfectly competitive firm is producing at a price below average total cost, its economic profit is:
A. positive.
B. zero.
C. negative.
D. normal.
Answer: C
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The production possibilities curve in Figure 2.1 illustrates the notion of
A) opportunity cost. B) increased factory goods production. C) diminishing resources. D) increased farm produce production.
As a result of U.S. tariffs imposed on wool from New Zealand, the quantity of this wool that is imported has
A) not changed. B) increased a lot. C) decreased. D) increased a little. E) changed but whether it has increased or decreased is ambiguous.
The substitution effect of a decrease in the wage will
A) decrease leisure, regardless of whether leisure is a normal or inferior good. B) increase leisure, regardless of whether leisure is a normal or inferior good. C) increase leisure only if leisure is a normal good. D) decrease leisure only if leisure is a normal good.
Which of the following would be most likely to cause a reduction in the supply of Nintendo video games?
a. a decrease in the price of Nintendo video games b. a decrease in the price of computer chips used to make Nintendo games c. an increase in the demand for Nintendo video games d. an increase in the price of computer chips used to make Nintendo games