The rule established for short-run profit maximization guarantees that a firm that follows it will earn economic profits.
Answer the following statement true (T) or false (F)
False
The profit maximization rule will lead a firm to the profit-maximizing point or the loss-minimizing point; there is no guarantee of profits.
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The above figure shows a perfectly competitive firm. If the market price is $5 per unit, the firm
A) will definitely shut down to minimize its losses. B) will stay open to produce and will make zero economic profit. C) will stay open to produce and will incur an economic loss. D) will stay open to produce and will make an economic profit. E) might shut down but more information is needed about the fixed cost.
According to the BEA, in the second quarter of 2012 purchases of new residential structures rose by 8.9 percent. Using the expenditure approach, this change increases
A) gross private domestic investment. B) government expenditure on goods and services. C) net exports of goods and services. D) personal consumption expenditures.
Greenbacks were first issued
(a) by the Federal government to help the economy out of a recession in the 1850s. (b) by the States to pay for the construction of canals. (c) by the Federal government to help pay for the Civil War (1861–1865). (d) by banks during the Free Banking Era.
Adverse selection in insurance requires that
a. potential customers face different levels of risk b. potential customers facing more risk are no more interested in purchasing insurance c. people are not risk averse d. insurers can tell higher risk people from lower risk people