If a firm fails to provide investors with at least a normal rate of return
A) it will not be able to remain in business in the short run.
B) it will have a positive economic profit but a negative accounting profit.
C) it will not be able to remain in business in the long run.
D) it will shut down in the short run but will be able to remain in business in the long run.
C
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The above figure shows the market for fertilizer. When fertilizer is applied to lawns, it runs off into neighboring streams and ponds, killing fish and creating an external cost
a) What is the equilibrium price and quantity of fertilizer in an unregulated, competitive market? b) What is the efficient quantity of fertilizer? c) Suppose government imposes a tax equal to the marginal external cost. What is the equilibrium price paid by consumers and the equilibrium quantity after implementation of the tax? d) At the output level in part (c), how much is the tax? e) How much tax revenue does government collect? f) What is the deadweight loss borne by society if the externality is left uncorrected?
Suppose the market demand for milk is Qd = 150 - 5P. Additionally, suppose that a dairy's variable costs are VC = 2Q2 (where Q is the number of gallons of milk produced each day), its marginal cost is MC = 4Q and there is an avoidable fixed cost of $50 per day. In the long run there is free entry into the market. Suppose the demand for milk doubles. If in the short run the number of firms is fixed and their fixed costs are sunk, the short run market supply function is:
A. Qs = 40P if price is greater than $20. B. Qs = P/4 if price is greater than $20. C. Qs = 2.5P if price is greater than $20. D. Qs = 300 - 10P for all prices.
Which of the following is an example of an automatic stabilizer?
A. Supply-side policies that Congress designs to stimulate the economy. B. Fed discount rate. C. Changes that are triggered by the economy and not by government decision makers. D. Discretionary fiscal policy that must be determined by Congress and the president.
Answer the following statements true (T) or false (F)
1) Strong economic growth since 1960 has allowed nations like Singapore and Ireland to surpass nations such as the United Kingdom and France in real GDP per capita. 2) Strong property rights inhibit economic growth by strictly regulating economic behavior. 3) Strong patent laws encourage innovation and promote economic growth. 4) The intense competition of free trade prevents the investment that generates economic growth. 5) A competitive market system promotes growth by providing producers with market signals on which to base investment and production decisions.