In a perfectly contestable market in the long run, each firm
a. produces at the minimum point on its long-run average total cost curve.
b. earns a profit below its opportunity cost of capital.
c. avoids making capital expenditures.
d. All of the above are correct.
a
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Which of the following statements is true?
A) It is possible for an economy to change its economic institutions but not its political institutions. B) Neither the political institutions not the economic institutions of a nation can be changed. C) It is possible for an economy to change its political institutions but not its economic institutions. D) It is possible for an economy to change both its political and economic institutions.
Did the 1957 Treaty of Rome turn the EU into a truly unified market?
A) Yes, it paved the way for the current EMU. B) No, although it established a customs union, it failed to remove barriers to the movement of goods and factors within Europe. C) No, it was only after the German unification and locating the ECB in Frankfurt that unity was achieved. D) No, since the Northern members of the EU had larger endowments of capital and skilled labor. E) No, the Treaty of Rome created more trade barriers between European countries.
The income effect of a price change is:
A. always consistent with the Law of Demand. B. never consistent with the Law of Demand. C. consistent with the Law of Demand only for normal goods. D. consistent with the Law of Demand only for inferior goods.
A higher saving rate leads to faster growth because
A) more saving produces greater additions to capital per hour of labor, raising real GDP per person. B) capital would wear out faster. C) people could consume more of an economy's output. D) population growth would accelerate.