Why is normal profit an opportunity cost?
What will be an ideal response?
Normal profit is the return to a firm's owner for the owner's supply of entrepreneurial ability and labor to the firm's production process. Using the owner's ability to run the business implies that the owner could have received a return for using it in another capacity, such as running another firm. This cost is an opportunity cost for the firm because it is the cost of a forgone alternative, which is running another firm, and must be included in calculating the firm's opportunity cost of production.
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Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03. This means that
A) beer and wine are substitutes and wine is a luxury good. B) beer and wine are substitutes and wine is an inferior good. C) beer and wine are complements and wine is a luxury good. D) beer and wine are complements and wine is an inferior good.
A rightward shift of the money supply ________
A) may come about from an increase in the quantity of money supplied by the Federal Reserve B) may come about from a decrease in the price level C) leads to a decrease in interest rates ceteris paribus D) all of the above E) none of the above
Suppose Bright Orange is large firm that grows and harvests oranges. Each orange yields 2 ounces of orange juice and exactly one orange peel. The market for oranges is perfectly competitive and Bright Orange sells the orange juice to juice distributors and the orange peels to fragrance companies. At a quantity of 400,000 oranges, juice distributors will pay $0.04 per ounce of orange juice and
fragrance companies will pay $0.15 per orange peel. At the quantity of 400,000 oranges, what is the market equilibrium price of an orange? A) $0.11 B) $0.25 C) $0.23 D) $0.19
The monopolistic competition market structure is characterized by a few large firms which account for a large percentage of industry sales
a. True b. False Indicate whether the statement is true or false