Which of the following goods and services would be excluded from the CPI?
a. Legal services
b. Used cars
c. French wines sold in the U.S.
d. Restaurant meals
e. Shares of stock in U.S. corporations
E
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Economic losses caused several firms to leave the car wash business in Portland, Oregon. Though prices have risen, firms are still leaving the industry. Apparently: a. economic profits exist but they are not as high as in other industries
b. economic profits are zero and firms won't stay in the industry if they are not earning an economic profit. c. firms are still generating economic losses. d. economic profits have decreased because of the exit of existing firms.
Even though households do not actually purchase certain items, the government estimates and adds to the consumption component what the household would pay for these items in the marketplace. An example of this type of item is
a. a car that an individual builds from parts of old cars b. food that a farm family grows for themselves c. a pond that a household member digs by hand d. police and fire protection e. a barn that a household builds on their own property
Mrs. Smith is operating a firm in a competitive market. The market price is $6.50 . At her profit-maximizing level of output, her average total cost of production is $7.00, and her average variable cost of production is $6.00 . Which of the following statements about Mrs. Smith's firm is correct?
a. Mrs. Smith is earning a loss and should shut down in the short run. b. Mrs. Smith is earning a loss but should continue to operate in the short run. c. Mrs. Smith is earning a profit since the price is above the average variable cost. d. Without knowing Mrs. Smith's marginal cost, we cannot determine whether she should stay in business or shut down.
Which of the following groups has an interest in encouraging free trade?
A. Neither workers nor producers in any industry are in favor of trade. B. Workers in import-competing industries. C. Producers in import-competing industries. D. Workers in export industries.