Suppose that a normal rate of return in the economy is 10% and the rate of return being earned by firms in a competitive industry equals exactly 10%. Which of the following is a correct prediction based on this information?
A. Firms in the industry will not undertake any investment projects other than to replace depreciating capital stock.
B. New firms will want to enter this industry, as the existing firms are earning an economic profit.
C. The industry size will contract.
D. Firms already in the industry will want to expand to try to increase their rate of return.
Answer: A
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Refer to the figure above. What is the quantity supplied in the market when the market is supplied by one firm?
A) 30 units B) 45 units C) 60 units D) 90 units
Consider the following statement, "The Federal Reserve fights recessions by increasing the money supply so people will have more money to spend." What is wrong with the statement and how can it be corrected?
What will be an ideal response?
If a household's income falls from $20,000 to $17,000 and its consumption spending falls from $18,000 to $15,000, then its: a. marginal propensity to consume is ?0.67. b. marginal propensity to consume is 0.88. c. marginal propensity to consume is 0.20. d. marginal propensity to save is 0
e. marginal propensity to save is 0.12.
The horizontal summation of the demands of each consumer at different price levels is called:
A. the price elasticity of market demand. B. the market demand curve. C. consumer surplus. D speculative demand.