If average labor productivity in two countries is the same, average living standards will be higher in the country with:
A. the smaller population.
B. the higher share of population employed.
C. the lower share of population employed.
D. the larger population.
Answer: B
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If perfectly competitive firms are making an economic profit, then
A) the market is in its long-run equilibrium. B) new firms enter the market and the equilibrium profit of the firms already in the market decreases. C) new firms enter the market and the equilibrium profit of the firms already in the market increases. D) firms exit the market and the economic profit of the surviving firms in the market decreases. E) firms exit the market and the economic profit of the surviving firms in the market increases.
Which of the following statements regarding historical costs is correct?
A) Historical costs represent what the firm paid for an input when it was purchased, adjusted for inflation. B) Historical costs vary depending on the method of depreciation a firm uses. C) Historical costs are a good indicator of the current opportunity cost of a piece of capital. D) Using historical costs can cause true economic profit to be under or over stated.
A cut in marginal tax rates would: a. increase the price level and real GDP in the short run if it has no effect on short-run aggregate supply
b. increase the price level and real GDP in the short run, even if possible aggregate supply effects are included. c. increase real GDP in the short run, but there is an indeterminate effect on the price level if there is no supply-side effect on aggregate supply. d. increase real GDP in the short run, but there is an indeterminate effect on the price level if supply-side effects on aggregate supply are included.
If we allow free trade in a small nation's industry where there is a domestic monopolist, the monopoly firm:
a. gains even more power. b. sees its profits rise. c. becomes a price taker, is not able to charge a higher price, and behaves like a competitive firm. d. is able to charge a higher price.