If firms are producing at a profit-maximizing level of output where the price exceeds the average total cost:
A. economic profits must be zero.
B. accounting profits must be negative.
C. other firms will enter the market.
D. firms will exit the market.
Answer: C
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Which of the following is a positive, as opposed to a normative, statement?
a. The US Department of Justice should allow a merger between AT&T and T-Mobile because it would have little effect on consumers. b. Antitrust laws should be used to prevent further concentration in the wireless telephone service market. c. The US Department of Justice sued AT&T to block its merger with T-Mobile. d. The wireless telephone service market is too highly concentrated.
The Five Forces Model helps illustrate the five competitive forces that determine the ________ in an industry.
A. level of competition and profitability B. profitability and degree of product differentiation C. price and quality of output D. level of R&D and price of output
At the optimal level of public goods provision, society's total willingness to pay per unit is equal to the marginal cost of producing the good.
Answer the following statement true (T) or false (F)
Product improvements make it difficult for the statisticians who construct the CPI to distinguish between ________ changes and ________ changes.
A. price; quality B. income; price C. quantity; quality D. quantity; price