Explain whether a firm's decisions are optimal if economic profit is (a) positive, (b) zero, or (c) negative
If economic profit is positive, then the firm's decisions are optimal; that is, its price and output yield a profit larger than any alternative prices and outputs.
If economic profit is zero, then the firm's choices are still satisfactory, because its price and output yield as much profit as the best available alternative.
If economic profit is negative, then the choice is not optimal; there exists at least one alternative price-output combination that is more profitable.
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Capital and labor are distinct from technology since ________
A) technology is exogenous B) technology is rival in its use C) capital and labor are physical things D) technology is a physical thing
Explain how a value-added tax (VAT) works and how it differs from a sales tax. What impact does a VAT have on government revenue and the price of products paid by consumers?
Advertising is likely to
A. shift the firm's average total cost curve upward and make demand more elastic. B. shift the firm's average total cost curve downward and make demand more elastic. C. shift the firm's average total cost curve upward and make demand more inelastic. D. shift the firm's average total cost curve downward and make demand more inelastic.
Which of the following definitions is correct?
A. Accounting profit + economic profit = normal profit. B. Economic profit - accounting profit = explicit costs. C. Economic profit = accounting profit + implicit costs. D. Economic profit - implicit costs = accounting profits.