Which of the following statements is correct?
A. Purely competitive firms, monopolistically competitive firms, and pure monopolies all earn
zero economic profits in the long run.
B. Purely competitive firms, monopolistically competitive firms, and pure monopolies all earn
positive economic profits in the long run.
C. In the long run, purely competitive firms and monopolistically competitive firms earn zero
economic profits, while pure monopolies may or may not earn economic profits.
D. Monopolistically competitive firms earn zero economic profits in both the short run and the
long run.
Answer: C
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If the economy is in the expansion phase of a business cycle and investment increases, when the multiplier effect kicks in, the expansion
A) is not effected. B) peaks. C) picks up speed. D) reverses. E) slows down.
Refer to Table 8-2. Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and ketchup. Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households. Using the information in the above table, nominal GDP for this simple economy equals
A) $7,400. B) $6,400. C) $5,800. D) 2,440 units.
What effect have Medicare subsidies had on the consumption of medical services?
A) The consumption of medical services has been unaffected, because people don't consider the financial cost when seeking services related to their health. B) The consumption of medical services has been unaffected, because government restrictions have prevented patients from seeking a level of care above and beyond what they would choose if they had to pay for medical treatment out of pocket. C) The consumption of medical services has increased because Medicare subsidies give people the incentive to seek more care than they would otherwise. D) The effect cannot be measured because it is difficult to quantify the amount of resources devoted to our health care system.
Policies which promote good governance of a society are:
A. based on favoritism. B. not important to pursue in developing countries. C. central to economic growth. D. uncommon in nations with high growth rates.