These are the cost and revenue curves associated with a firm.
Assuming the firm in the graph is producing Q1 and charging P3, it is likely showing the cost and revenue curves of a firm in:
A. the long run, and accounting profits are zero.
B. the short run, and economic profits are positive.
C. the short run, and accounting profits are negative.
D. the long run, and economic profits are zero.
Answer: D
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When the opportunity cost of producing more of a good is increasing, the marginal cost of producing more of the good is
A) decreasing. B) constant. C) increasing. D) More information is needed to answer the question.
Suppose an insurance company has estimated that 20 percent of all of its potential policy owners are high-cost and sets a price for their insurance policy with the understanding that 20 percent of its policy owners will be high-cost. If the true percentage of high-cost potential policy owners is 40 percent, the insurance company is likely to face ________.
A) moral hazard B) the principal-agent problem C) adverse selection D) the bad apple problem
When a regulator is concerned about pleasing different groups in order to keep employed, this is known as the
A) share-the-gains, share-the-pains theory. B) regulatory hypothesis. C) capture hypothesis. D) creative theory.
According to the Keynesian model, the economy will be in equilibrium when
a. the growth of the money supply is constant over time. b. planned leakages equal planned injections. c. the government’s budget is balanced. d. the labor force is fully employed.