When the existing firms in a competitive industry have different operating costs:
a. the highest-cost firm in operation breaks even, while the low cost firms will earn profit.
b. the highest-cost firm in operation breaks even, while the low cost firms leave the industry.
c. the low cost firms earn a larger profit than the high-cost firms.
d. the highest-cost firms will incur a deadweight loss.
A
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Starting from a position of macroeconomic equilibrium at the full-employment level of real GDP, in the short run an unanticipated increase in the money supply will
a. raise real interest rates, lower prices, and reduce real GDP. b. raise real interest rates, lower prices, and leave real GDP unchanged. c. raise nominal interest rates, lower prices, and leave real GDP unchanged. d. lower real interest rates, raise prices, and increase real GDP.
Entrepreneurship
What will be an ideal response?
Some economists develop theories concerning policy issues to
A. further their own political agendas. B. understand what happened in an earlier time period. C. describe current economic events. D. make sound recommendations about policy alternatives. E. help elect new government officials.
Which of the following is true of a used-car market?
A) Sellers have more information than the buyers. B) Gains from trade do not exist in this market. C) The cars sold are identical in quality. D) There is no consumer surplus in this market.