All competitive firms earn zero economic profit in both the short run and the long run
a. True
b. False
Indicate whether the statement is true or false
False
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
How does the classical position on saving differ from Keynes's position?
A) Classical position: people save more at lower interest rates. Keynes's position: people save less at lower interest rates. B) Classical position: changes in the interest rate are irrelevant to saving decisions. Keynes's position: saving is directly related to the interest rate. C) Classical position: saving is directly related to the interest rate. Keynes's position: at times, saving may be inversely related to the interest rate. D) Classical position: saving can be inversely related to the interest rate. Keynes's position: consumption rises as saving rises. E) none of the above
Efficiency occurs if the:
A. socially optimal quantity of goods and services is being produced. B. market is in equilibrium. C. individually rational quantity of goods and services is being produced. D. government does not interfere with market prices.
The equilibrium price under an import quota is below the price that occurs with free trade.
Answer the following statement true (T) or false (F)