Under perfect competition, regarding short-run profit, a firm may find itself losing money. This is true because:
a. the firm was unable to pick the output that maximized profit
b. the market conditions make the highest possible profit a negative number
c. the demand for its product is weak or its costs are high
d. both b and c
d
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When determining value added, national income accounting systematically ignore
A) accounting profits. B) economic profits. C) accounting losses. D) the expected market value of unsold inventory.
When faced with a market failure, the government:
A. often encourages the well-functioning firms to stay through protectionist policy. B. usually tries to redistribute the existing surplus more fairly. C. generally enacts thoughtful policy in order to create market efficiency. D. always takes over the market.
Assume that Japan and South Korea have flexible exchange rates. Other things equal, if economic growth is more rapid in Japan than in South Korea:
A. gold bullion will flow out of Japan. B. the Japanese yen will depreciate. C. the South Korean won will depreciate. D. the yen and won exchange rate will stay constant.
Differentiate between discretionary fiscal policy and non discretionary or built-in stabilization policy.
What will be an ideal response?