A sole proprietorship is typically a relatively small business because
a. its operations must stay within state borders
b. it is operated out of the proprietor's home
c. there are no employees, only working family members
d. there are no bank loans available for expansion
e. expansion often requires a partner or conversion to another form of business organization
E
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Banks prefer to make loans than keep reserves because they earn interest on loans and must pay interest on reserves
Indicate whether the statement is true or false
An inflationary gap is occurs when
A) real GDP is less than potential GDP. B) real GDP exceeds potential GDP. C) real GDP equals potential GDP. D) the economy is at full employment.
In the scenario above, which of the following actions will maximize the industry's economic profit?
A) Both firms comply with the agreement. B) Both firms cheat on the agreement, producing more than the agreed amount. C) One of the firms complies with the agreement while the other firm cheats, producing more than the agreed amount. D) Because the firms are colluding, the profit does not change regardless of whether the firms comply with agreement or cheat on the agreement.
A new cure for Toenail fungus is discovered for individuals resistant to the original treatment. At this point the firm producing this drug
a. Could be considered a monopoly b. Would be protected from entry by patents c. Would be facing many new entries in the market d. Only A&B