Mutually Assured Destruction was a standing policy during the Cold War, in which the United States and the U.S.S.R. maintained and expanded nuclear arsenals beyond practical levels. What could explain such a phenomenon?
A) insane public officials who were bent on world domination
B) a prisoners' dilemma
C) a leader-follower type game
D) tacit collusion
B
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International trade exists because countries
A) can make themselves better off through trade. B) want to be neighborly with each other. C) want to be political allies. D) want to improve diplomatic relations with each other. E) want to avoid war with each other.
Which of the following is true in the long run for both monopoly and perfectly competitive industries?
A. There are low barriers to entry. B. Firms can earn positive economic profits in the long run. C. Firms produce at levels that are economically efficient. D. Firms will go out of business if they cannot charge a price that is at least equal to average total cost.
Suppose a competitive firm's total revenue is $1,000,000 where MR = MC, its explicit variable costs are $900,000, its fixed costs are $90,000 of which $60,000 are sunk in the short run. If its implicit opportunity costs are $50,000, the firm should
A) produce because its economic profit is positive. B) produce because its economic profit is zero. C) produce even though its economic profit is negative. D) shut down.
The long-run aggregate supply curve reflects the idea that in the long run, output is determined only by
A. given technology. B. the factors of production. C. aggregate demand. D. both A and B.