A perfectly competitive firm will earn ________ economic profits in the range of output for which the firm's price is above its minimum average total cost.
A. positive
B. zero
C. negative
D. Any of the above answers could be correct.
Answer: A
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In the case of a small country, consumer surplus
A) decreases less with a tariff than with an equivalent quota. B) decreases less with a quota than with an equivalent tariff. C) is not changed by tariffs or quotas. D) decreases the same with tariffs and equivalent quotas. E) increases more with quotas.
A firm sells a product in a purely competitive market. The marginal cost of the product at the current output level of 800 units is $3.50. The minimum possible average variable cost is $3. The market price of the product is $4. To maximize profits, the firm should
A. decrease production to less than 800 units. B. continue producing 800 units. C. increase production to more than 800 units. D. shut down.
If the optimal forecast of the return on a security exceeds the equilibrium return, then
A) the market is inefficient. B) no unexploited profit opportunities exist. C) the market is in equilibrium. D) the market is myopic.
Which of the following is an example of a U.S. export of services?
a. a Canadian buys a Ford automobile that was produced in the United States b. a U.S. traveler buys an Irish knit sweater made in Ireland c. a British citizen buys an American Airlines ticket from London to New York d. a U.S. citizen puts money into a French money market account e. a Japanese exchange student buys a Big Mac while attending college in California