A firm's "normal profit" is best characterized by the
A) average of a firm's profits over the past five years.
B) amount of profit necessary to keep the price of a firm's stock from changing.
C) amount of profit a firm could earn in its next best alternative activity.
D) the average amount of profit earned in the firm's industry.
C
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It is true in monopoly pricing that the
A. sky is not the limit. B. market cannot impose a price on a monopolist. C. monopolist is a price maker. D. All of these responses are correct.
A firm is more likely to produce its own input if all of the following are true except which one?
A) The firm has trade secrets. B) The firm experiences economies of scale when producing the input. C) The firm is concerned about quality control. D) The transportation cost of the input is inexpensive.
Speculators play an important role in a system of floating exchange rates because
a. to make a profit, they must buy a currency when its value is low and sell it when its value is high. b. their purchases and sales lead to wild gyrations in exchange rates and thus increase instability. c. they place additional risks on businesses that need to purchase and sell foreign currency. d. All of the above are correct.
Two countries that specialize their production along the lines of comparative advantage and then trade with each other will be able to:
A. both produce and consume more. B. produce less and consume more. C. produce more and consume less. D. both produce and consume less.