Will a perfectly competitive firm ever produce in the short run even though it is incurring an economic loss?
What will be an ideal response?
Yes, a perfectly competitive firm will continue to produce even though it is suffering an economic loss if the price exceeds the minimum average variable cost. In this case, even though the firm has an economic loss, if it shut down, its economic loss would be larger.
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Which of the following practices is restricted by the antitrust laws of the United States?
a. Merger of smaller firms into a large firm b. Entry of new firms in the long run c. Standardization of products in a market d. Exit of non-performing firms in the long run e. Quality differentiation by competitive firms
Which of the following events did not contribute to the high rate of savings and loan failures in the 1980s and 1990s?
a. The bankruptcy of the FDIC b. Deregulation of the banking industry that allowed investment houses to compete with banks and S&Ls for depositors c. The elimination of Regulation Q d. The entry of S&Ls into riskier loan markets e. Substantial fraud in lending activities
If the inflation rate in country A is 3.5% and the inflation rate in country B is 3.0%, we should expect the percentage change in the number of units of country A's currency per unit of country B's currency to be:
A. +16.7%. B. +6.5%. C. +0.5%. D. -0.5%.
Which of the following statements is true about price ceilings?
A. Price ceilings cause goods to be rationed by some other means than free market prices. B. Ration coupons are the only way to ration goods when price ceilings are in place. C. Price ceilings cause goods to be rationed by prices. D. All of these statements are correct.