Which of the following best exemplifies a firm with a zero economic profit?
a. A hair salon that is making a small profit after expenses, but whose owners feel they could make more money by closing the business and getting different jobs.
b. A bike shop that makes enough of a profit that its owners feel it is worth the time and money they put into the business.
c. A cleaning service that is just getting started and does not yet have enough customers to cover the firm’s expenses.
d. A popular restaurant with revenues that greatly exceed expenses and whose owners are planning to expand into a chain.
b. A bike shop that makes enough of a profit that its owners feel it is worth the time and money they put into the business.
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If it is not possible for a pharmaceutical drug maker to sell its generic cholesterol reducing drug along with some name brand cholesterol reducing drugs, we have an example of
A) monopoly due to ownership of key resources. B) monopoly due to governmental entry restrictions. C) monopoly due to economies of scale. D) pure competition.
In terms of economic elasticities, why would farmers be upset to see a bumper crop?
In the short run, which are most important in determining changes in output?
a. marginal costs and marginal revenue. b. total costs and total revenue. c. average costs and total revenue. d. fixed costs.
Which of the following is true?
a. Competitive forces are present even in markets with high barriers to entry. b. Quality competition is an unimportant element of the competitive process. c. Profitability and high prices discourage technological change and the development of substitute products. d. Government regulations have substantially increased the quality of American manufacturing products in recent years.