If a purely competitive firm is maximizing economic profit:
A. it is necessarily maximizing per-unit profit.
B. it may or may not be maximizing per-unit profit.
C. then per-unit profit will be minimized.
D. it is necessarily overallocating resources to its product.
Answer: B
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Quasi-concavity of utility functions insures that with only two goods, these goods must be:
a. gross substitutes. b. gross complements. c. net substitutes. d. net complements.
If a $1 increase in price leads to a 3-unit decrease in quantity demanded, then demand must be elastic
a. True b. False
Taxes on labor have the effect of encouraging
a. workers to work more hours. b. the elderly to postpone retirement. c. second earners within a family to take a job. d. unscrupulous people to take part in the underground economy.
The purchase price of capital is
a. the value of the capital to the firm. b. always less than the rental price. c. the price received from the flow of some capital services. d. the price a person pays to own that factor of production indefinitely.