Inventions like gunpowder and the wheelbarrow were created by the Chinese hundreds of years ago. The fact that such items were not put to productive use was caused primarily by a lack of ____.
A. available financial capital
B. incentives for entrepreneurship
C. an adequate price system
D. ingenuity
Answer: B
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In the short run, an increase in the price level induces firms to expand production because
A) they can increase profits by increasing maintenance costs. B) higher prices allow firms to hire more inputs by offering higher prices for inputs, which increases productivity and profits. C) each firm must keep its production level up to the level of its rivals, and some firms will expand production as the price level increases. D) prices of inputs are held constant, so the higher prices for firms' products imply that it is profitable to expand production.
Which of the following characterize a firm in monopolistic competition in the long run?
i. operating at the minimum efficient scale ii. markups of price over marginal cost iii. zero economic profit A) i and ii B) i and iii C) ii and iii D) i, ii, and iii E) only ii
What is a price taker? Discuss the assumptions used to obtain the perfectly competitive model
What will be an ideal response?
John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance he will earn $100,000 and a 50 percent chance he will earn $300,000. If he does expand, there is a 30 percent chance he will earn $100,000, a 30 percent chance he will earn $300,000 and a 40 percent chance he will earn $500,000. It will cost him $150,000 to expand. John should:
A. expand, since he expects to earn $320,000 by expanding, and it will only cost him $150,000 to do so. B. not expand, because there is a chance John will earn the same as if he didn't expand and would be out the $150,000 investment. C. not expand, since he expects to earn $120,000 more by expanding than not, and it will cost him $150,000 to do so. D. expand, since he has a 70 percent chance of earning more than the cost of expansion.