Refer to the figure below. At the market equilibrium quantity, the social marginal cost of the last ton of paper produced is ________ the marginal benefit of the last ton of paper produced.
A. equal to
B. less than
C. greater than
D. less than or equal to
Answer: C
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The difference between zero accounting profit and zero economic profit is that
A. an economic profit of zero indicates a fair rate of return because it includes the opportunity cost of a firm’s capital. B. an economic profit of zero indicates an unacceptable rate of return because it does not include the opportunity cost of a firm’s capital. C. an economic profit of zero indicates more than a fair rate of return because it includes opportunity cost and explicit cost. D. an accounting profit of zero indicates a fair rate of return because it includes the opportunity cost of a firm’s capital.
Generally, ________ motivates firms to enter an industry, while ________ motivates firms to exit an industry.
A. accounting profit; accounting loss B. economic profit; economic loss C. accounting profit; economic loss D. economic profit; accounting loss
If tastes for foreign goods and services go up, then we would expect aggregate expenditure to:
A. remain constant. B. decrease. C. increase. D. increase and then sharply decrease more.
Barbara is a retailer of propane and propane accessories. As she designs her store layout for the new season, she recalls that a tax has just been removed from propane and propane products. If her store reflects the overall market, how should this knowledge influence her design?
a. She should make the propane area larger because more propane will be sold. b. She should leave the propane area the same size because the same amount of propane will be sold. c. She should make the propane area smaller because less propane will be sold. d. She should close the propane area until a new tax is added to propane.