When a perfectly competitive firm experiences positive economic profits
A) the high barriers to entry prevent further competition.
B) existing firms exit the industry.
C) additional firms enter the industry.
D) firms have no incentive to exit or enter the industry.
C
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Does the proprietor of a grocery store who owns the building in which his business is located have lower costs than a grocery store proprietor who must pay rent for the building in which his store is located?
A) No, because no two businesses will be exactly the same. B) No, because the owner-proprietor loses the rent he could otherwise have been paid. C) Yes, because he can afford to set lower percentage markups. D) Yes, if the cost saving is not offset by higher expenses in other areas.
Institutions that borrow money from savers to lend to borrowers are known as
A) financial markets. B) bond brokers. C) financial intermediaries. D) asset exchanges.
Heuristics:
A. are rules of thumb that generate decisions that generally maximize net benefits. B. take a long time to develop and are therefore avoided by rational decision makers. C. are shortcuts that save time and energy in decision making. D. always waste mental resources by leading people to suboptimal outcomes.
You rent a DVD of The Dark Knight Rises. The rental is for seven days and you watch the movie on the first day. You tell a friend about the film and your friend asks to come over and watch the movie with you before it is due back. What is your opportunity cost if you decide to watch the movie a second time instead of going to a football game?
A. the entire cost of the movie rental, since you have already watched the movie B. one half the rental cost, because you have already watched the movie one time C. zero, because you already paid for the rental. D. the football game you forego by watching the movie again