In the short run
A. all firms that earn a loss will shut down.
B. firms act to minimize losses or maximize profits.
C. if current firms are earning a profit, new firms will enter the industry.
D. All of the above are correct.
Answer: B
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Which one of the following is true of a market for used cars?
A. A consumer typically overestimates the probability of getting a lemon (low-quality car). B. As buyers become more pessimistic about their chances of buying a high-quality car, the price of used cars (both low-quality and high-quality) decreases. C. There is a public information problem. D. The willingness to pay is less than the willingness to accept.
If the price of output increases, the labor ________ curve shifts to the ________.
A. demand; left B. demand; right C. supply; left D. supply; right
For a demand curve to be upward sloping, the good would have to be an inferior good, and
A) the income effect would have to be larger than the substitution effect. B) the income effect would have to be smaller than the substitution effect. C) the income effect would have to be equal to the substitution effect. D) the income effect and the substitution effect would have to be nonexistent.
An import quota is
A. a tax on imported goods. B. revenue producing for state governments but not the federal government. C. a limit on the quantity of foreign goods that can be sold in a nation's domestic market. D. deflationary.