In the long run, a perfectly competitive firm makes zero economic profit. What incentive does the firm have to stay in business if it is making zero economic profit?
What will be an ideal response?
Zero economic profits do not mean no profit whatsoever. The owners of the firm are still making a normal profit. A normal profit compensates the firm's owners enough to keep the firm in business because it is equal to the owner's opportunity cost. Hence the firm has the incentive to stay in business.
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During the Great Depression, real GDP decreased by roughly ____ percent and unemployment rose to roughly ____ percent
a. 5; 10 b. 20; 10 c. 30;25 d. 50;25
An economy is said to be saving lives efficiently
a. if the number of lives saved increases each year b. whenever the cost of saving lives is decreasing c. if it is operating on its production possibilities frontier d. if more resources are devoted to saving lives than to any other activity e. if fewer resources are devoted to saving lives than to any other activity
Macaroni and cheese are considered to be
a. normal goods b. complementary goods c. substitute goods d. equilibrium goods e. market-day goods
Alternating periods of economic growth and contraction are referred to as
A. The business cycle. B. A policy lever. C. Fiscal policy. D. The fiscal cycle.