At the short-run break-even price, the firm
A) is earning positive economic profits.
B) is earning negative economic profits.
C) is making a normal rate of return on its capital investment.
D) may be earning a positive or negative economic profit depending upon costs.
Answer: C
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Suppose that you know a good is a normal good for a consumer. Which of the following can you then conclude to be true:
A. The own-price elasticity of demand is less than -1. B. The income elasticity of demand is greater than 0. C. The own-price elasticity of demand is greater than -1. D. The income elasticity of demand is less than 0. E. Both (a) and (b). F. Both (a) and (d). G. Both (b) and (c). H. None of the above.
Suppose Congress passes an investment tax credit that increases the quantity of investment goods that firms demand at any given interest rate. Which of the following would you expect to occur as a result of this change?
a. In the short run, unemployment will increase and inflation will fall. b. In the short run, unemployment will increase and inflation will rise. c. In the short run, unemployment will decrease and inflation will rise. d. In the short run, unemployment will decrease and inflation will fall.
For which one of the following goods would we need to sum individual demand curves vertically to obtain the total demand curve?
A. Frozen yogurt. B. Bubble gum. C. Microwave popcorn. D. Courts of law.
The GDP equation is:
A. Y = C + I + G + NX. B. Y = C - I - G - NX. C. C + I = G + NX. D. C + I = Y + G + NX.