Firms cannot enter an industry in which positive profits are being earned in
A. the short run.
B. the long run.
C. the short run and in the long run.
D. As long as positive profits are being earned, firms can enter the industry in both the short run and the long run.
Answer: A
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When the interest rate changes,
A) the demand curve for bonds shifts to the right. B) the demand curve for bonds shifts to the left. C) the supply curve for bonds shifts to the right. D) it is because either the demand or the supply curve has shifted.
Suppose the demand for pizza in a small isolated town is p = 10 - Q. There are only two firms, A and B, and each has a cost function TC = 2 + Q
Compare the firms' profits if they behave as Cournot duopolists with their profits if they form a cartel and share the market.
Other things the same, a lower real interest rate decreases the quantity of
a. loanable funds demanded.
b. loanable funds supplied.
c. domestic investment.
d. net capital outflow.
If a firm could hire all the workers it wanted at a zero wage (i.e., the workers are volunteers), the firm should hire
A. Enough workers to produce the output where diminishing returns begin. B. All the workers that can fit into the factory. C. Enough workers to produce the output where worker productivity is the highest. D. Enough workers to produce where the MPP equals zero.