Economic profits in a competitive industry are signals that
a. attract new firms into the industry
b. prevent firms from adopting newer technologies
c. encourage existing firms to continue to operate inefficiently
d. indicate that business conditions are improving
e. cause the industry's resources to be used in lower valued uses
A
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Production possibilities frontiers are typically concave (bowed out) from the origin because
a. of the law of supply b. there is usually a one-for-one trade-off in resources used in production c. economies of scale enable firms to reduce the average costs of production as output rises d. the opportunity cost of a good rises as the quantity of the good produced increases e. resources are often left idle in the firm
The opportunity cost of an item is
a. the number of hours needed to earn money to buy the item. b. what you give up to get that item. c. usually less than the dollar value of the item. d. the dollar value of the item.
List and briefly explain each of the four properties of indifference curves
The price of a gallon of gasoline at the pump increased by 10 percent at the same time that the inflation rate was 15 percent. The nominal price of gasoline ________, and the real price of gasoline ________.
A. increased; also increased B. increased; decreased C. decreased; increased D. increased; did not change