If a firm has no ability to influence the market price of its product, it:
A. will go out of business due to losses.
B. is a price-maker.
C. cannot maximize profit.
D. has a horizontal individual demand curve.
Answer: D
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Why does a firm in monopolistic competition earn zero economic profit rather than an economic profit in the long run?
What will be an ideal response?
If the price of the good measured along the vertical axis increases without a change in the price of the good measured along the horizontal axis, the consumer's budget constraint:
A) pivots rightward without a change in the intercept on the horizontal axis. B) pivots leftward without a change in the intercept on the horizontal axis. C) shifts to the right. D) shifts to the left.
Suppose you read in the paper that the Federal Reserve plans to expand the money supply. The Fed is most likely to do this by
A) printing more currency and distributing it. B) purchasing government bonds from the public. C) selling government bonds to the public. D) buying newly issued government bonds directly from the government itself.
Which of the following is a false statement about absolute and comparative advantage?
a. Comparative advantage is the basis for gains from trade. b. It is possible for one country to have the absolute advantage in all goods. c. It is possible for one country to have the comparative advantage in all goods. d. To find comparative advantage, you need to consider opportunity cost. e. All of these statements are true.