A perfectly competitive firm cannot earn an economic profit in the long run because
A) it is a "price-maker."
B) it faces a perfectly inelastic demand curve.
C) there are no barriers to entry into the industry.
D) all firms in the industry earn accounting profits.
Answer: C
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Refer to Figure 5-3. The efficient output level is
A) Qo. B) Qo - Qm. C) Qm. D) Qn.
In a large open economy,
A) domestic lending and borrowing decisions have no impact on the world real interest rate. B) an increase in the domestic supply of loanable funds would lower the world real interest rate. C) the domestic equilibrium real interest rate is determined independently of foreign borrowing and lending. D) an increase in the domestic demand for loanable funds would lower the world real interest rate.
The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource. To correct for this problem, the town could
a. allow individual shepherds to choose their own flock sizes. b. internalize the externality by subsidizing the production of sheep's wool. c. auction off a limited number of sheep-grazing permits. d. wait until the market corrects the problem.
If a nation has a(n) _____ in the production of an item, it can produce _____ of the item with the same quantity of resources than can other nations.
A. absolute advantage; more B. mutual gain; the same amount C. special advantage; more D. comparative advantage; more