Figure 10-4
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Figure 10-4 shows the industry’s supply and demand curves in panel (1) and the cost curves of a firm in the industry in panel (2). At S2, the firm is
A. going to shut down.
B. incurring losses.
C. earning zero economic profits.
D. earning economic profit greater than zero.
Answer: C
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The demand for a necessity whose cost is a small portion of one's total income is
A. perfectly inelastic. B. relatively inelastic. C. relatively elastic. D. unit-elastic.
A new technology is discovered which results in all new cars producing 50 percent less pollution. Which of the following is true?
A) Real GDP increases because the air is cleaner, but nominal GDP does not change since air is free. B) GDP will increase to reflect the fact that the air we breathe is cleaner. C) GDP will increase if there is an increase in the production cost and price of the car. D) GDP increases anytime pollution is reduced. E) GDP will decrease.
Capital inflows that take the form of direct investment may be particularly beneficial if they bring new technologies, new management techniques, and new ideas to the host country
Indicate whether the statement is true or false
The FOMC directive does not contain a target
A) growth rate for M1. B) growth rate for M2. C) growth rate for M3. D) federal funds interest rate.