If a perfectly competitive firm in the short run is producing where P = ATC = MC, this firm is
A) incurring losses.
B) earning economic profits.
C) obliged to shut down.
D) on the downward-sloping portion of its demand curve.
E) at its profit-maximizing output level.
Ans: E) at its profit-maximizing output level.
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A few years ago Netflix (N) pioneered an online DVD rental service. Blockbuster (B), a brick and mortar DVD/video rental company, waited until Netflix had been in business for over a year before deciding whether to establish its own online rental service. At this point, Netflix had to decide whether or not to lower its subscription price in order to deter Blockbuster's entry into the market. Figure 14-1 shows the decision tree for the Netflix-Blockbuster entry game.
Refer to Figure 14-1. If Netflix lowers its price will this deter Blockbuster from setting up an online DVD rental service?
If the punishment associated with breaking a ban is not severe enough, it may:
A. not alter the trade-offs enough to change the consumption patterns of the banned good. B. cause even more consumption of the good, exaggerating the problem. C. still decrease the consumption of the good if the price of the good changes. D. still be effective if it gains media attention.
Suppose for an economy, investment = $40; saving = $50, government spending + exports = 100; and taxes + imports = $110 . Then for this economy, total leakages exceed total injections by $20, so there will be pressure for the economy to contract
a. True b. False Indicate whether the statement is true or false
The following table provides data for an economy in a certain year.Consumption expenditures50Imports40Government purchases of goods and services20Construction of new homes and apartments30Sales of existing homes and apartments40Exports50Government payments to retirees10Household purchases of durable goods20Beginning-of-year inventory10End-of-year inventory20Business fixed investment30Given the data in the table, compute the investment component of GDP.
A. 40 B. 60 C. 30 D. 70