When economic profits are positive, accounting profits could be:
A. negative.
B. zero.
C. positive.
D. All of these are possible.
Answer: C
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Historically, consumption spending in the United States has _____
a. fluctuated greatly with changes in the level of income b. remained approximately constant as a percentage of income c. decreased as a percentage of income d. varied inversely with the inflation rate e. varied inversely with the interest rate
The saying “the lower the price, the better” may not always be correct for an economy’s public interest because
A. people should have to pay for what they want. B. people will overuse something they perceive as being cheaper than the utility they receive for it. C. the government can no longer afford to provide all the goods and services it provides because it is slowly going broke. D. cheaper prices will make people buy less of other things.
The difference between accounting profit and economic profit relates to
a. the manner in which revenues are defined b. how total revenue is calculated c. the market structure for the firm's industry d. the price of the good in the market e. the manner in which costs are defined
When economies of scale are present,
a. costs per unit decline as output expands. b. the government feels responsible for breaking up the firm. c. firms always make handsome profits. d. costs fall as the size of the product is increased.