Economic profits at the short-run break-even point are
A) positive.
B) negative.
C) equal to zero.
D) indeterminate since they also depend on the size of the fixed costs.
C
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Answer the following statement(s) true (T) or false (F)
1. When labor and capital are complements in production, a higher wage will cause a firm to use more capital in the long run. 2. When a firm's long-run demand curve for labor is derived, the amount of capital employed is held constant. 3. The substitution effect of a rise in the wage may increase or decrease the firm's employment of labor. 4. Derived demand for an input is the process by which individual firm's demand for labor are aggregated to get the industry demand for labor. 5. The substitution effect on labor always decreases the amount of labor employed when the wage rate goes up.
A decreasing-cost industry will have
A) a perfectly elastic long-run supply curve. B) a perfectly inelastic long-run supply curve. C) an upward sloping demand curve in the long run. D) a downward sloping supply curve in the long run.
If the government increases its purchases of goods and services by $3,000 and the MPC is 0.8, GDP and income will eventually increase by:
A. $2,400. B. $6,000. C. $15,000. D. $24,000.
Assume that a hurricane in Brazil destroys half of the coffee crop. Considering that Brazil is a major coffee producing country, consumers expect the price of coffee to increase in the near future. How does this reflect on the demand for coffee?
a. There is a movement upward along the demand curve for coffee. b. The demand curve for coffee shifts inward. c. The demand curve for coffee shifts outward. d. There is a movement downward along the demand curve for coffee. e. The demand for coffee declines.