If firms are producing at a profit-maximizing level of output where the price exceeds the average total cost:
A. accounting profits must be positive, but economic profits are zero.
B. economic profits must be positive.
C. other firms will exit the market.
D. firms will exit the market.
B. economic profits must be positive.
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A decrease in the quantity of money supplied shifts the money supply curve to the ________, and the equilibrium interest rate ________, everything else held constant
A) right; falls B) right; rises C) left; falls D) left; rises
A perfectly competitive industry has
a. A perfectly elastic demand curve b. A perfectly elastic supply curve c. A downward sloping demand curve d. A downward sloping supply curve
Tombstones are produced in a monopolistic competitive market. One producer, Rolling Stones, sells 20 tombstones a week at a price of $500 each. Its average total cost is $600 . Its total variable cost is $2,000 . Its demand curve is downward sloping. Given this information, we know that
a. new firms will enter the market b. Rolling Stones loses $2,000 a week c. Rolling Stones makes an economic profit of $400 d. Rolling Stones makes an accounting profit of $100 e. Rolling Stones should increase production because with a downward-sloping demand curve, it will increase its economic profit
Suppose a tax is imposed on producers of aluminum as a means of internalizing the externality associated with aluminum production. If the tax accurately reflects the external costs of pollutants released into the atmosphere, then the new supply curve for aluminum coincides with which other curve?