How can lack of investment in social capital affect private firms' profits?
What will be an ideal response?
Most social capital is in the form of roads, transit systems, fire services, police services, water, and sewer systems. All businesses use some combination of these services to conduct their business. For example, when transportation systems are inadequate, labor may be prevented from producing goods and services, or goods and services may be prevented from being sold. Either scenario will reduce a firm's overall profits by reducing quantity sold and therefore total revenue.
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What is the largest problem associated with using a tax to correct for an externality? Explain
What will be an ideal response?
Congress passed the ________ in 1996, the purpose of which was to phase out price floors and return to a free market in agriculture
A) Agribusiness Act B) Smoot-Hawley Act C) Freedom to Farm Act D) Rice and Beans Act
All else equal, the ________ the coupon rate on a bond, the ________ the bond's duration
A) higher; longer B) higher; shorter C) lower; shorter D) greater; longer
In the short run, the monopolistic competitor is just like the perfect competitor in that
A) equilibrium is determined by setting price equal to marginal cost. B) either type of firm can earn economic profits, experience economic losses, or break even in the short run. C) each equates marginal revenue and marginal cost in order to maximize profits, with the result that price exceeds marginal revenue. D) new firms enter in the short run when firms are making profits.