In the past few years the demand for donuts has greatly increased. This increase in demand might best be explained by:
A. an increase in the cost of making donuts.
B. a change in buyer tastes.
C. an increase in the price of coffee.
D. consumers expecting donut prices to fall.
Answer: B
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Which of the following statements regarding the trucking industry is correct?
A) The recession of 2007 -2009 caused many trucking firms to exit with many firms filing for bankruptcy. B) The trucking industry most closely resembles an oligopoly. C) Even though there is a high degree of competition, firms in the trucking industry are able to sustain positive economic profits as a result of a substantial degree of product differentiation. D) The trucking industry was largely unaffected by the recession of 2007-2009 mainly because the industry is comprised by large firms with significant market power.
If AC > p where MR = MC
A) firms earn positive profits and new firms will enter. B) firms earn negative profits and existing firms will leave. C) firms earn zero profits and new firms will not enter and no existing firms will leave. D) None of the above.
International investors are more likely to invest in countries
A) where it is relatively easier to establish property rights to capital goods. B) where there is a significant amount of dead capital. C) which have a high amount of government inefficiency. D) where there are barriers to the ownership of capital goods.
If, at its profit-maximizing output level, the price of the good is less than average variable cost, the firm should shut down immediately
Indicate whether the statement is true or false