In the short run, a firm should shut down its operation if:
A. its losses are less than TFC at the MR = MC point.
B. its losses equal TFC at the MR = MC point.
C. its losses are greater than TFC at the MR = MC point.
D. TR is less than TC.
Answer: C
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What happens to the gap between teh actual quantity and the socially optimal quantity as the demand for the resource becomes more inelastic? A) Gap widens B) Gap declines C) Gap does not change D) We do not have enough information to answer this question
Which of the following describes an individual’s labor supply curve when the desire for more wage-related income is stronger than the desire for more free time?
a. U-shaped b. backward bending c. upward sloping d. downward sloping
Which of the following is a shortcoming of GDP?
A. GDP excludes changes in inventories. B. GDP includes an estimate of illegal transactions. C. GDP excludes nonmarket transactions. D. GDP excludes business investment spending.
Which of the following statements of the expected flow of future benefits is false?
A. If future benefits are overestimated by the firm, the firm will under invest in capital. B. Firms must rely on forecasts of expected future benefits to make sensible investment decisions. C. If future benefits are underestimated by the firm, the firm will under invest in capital. D. Households, business firms, and governments all evaluate the expected flow of benefits when making investment decisions.