When actual real GDP output is below full-employment real GDP, the GDP measures the cost of cyclical unemployment
a. True
b. False
Indicate whether the statement is true or false
False
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Use the following information to answer the next question. Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10% interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 each. Of the $75, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. What is the economic profit generated by Extreme Gaming in the first year?
A. $160,000 B. $280,000 C. $220,000 D. $155,000
Collusion refers to a situation where rival firms decide to
A. agree with each other to set prices and output. B. cheat on each other. C. compete aggressively against each other. D. combine their operations and merge with each other.
Business firms are prohibited by law from borrowing money from banks.
Answer the following statement true (T) or false (F)
In the long run, a monopolistically competitive firm's demand curve must be tangent to its average cost curve
a. True b. False Indicate whether the statement is true or false