How do economists view profits?
A. Profits are an asset the business holds.
B. Profits are one of the costs paid to a factor of production.
C. The firm's profit equals the sum of all payments to the 5 factors of production.
D. Profits are guaranteed as long as a firm operates ethically.
Answer: B
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Which of the following statements about a monopolistically competitive firm is FALSE?
A) It tries to differentiate its product from that of competitors. B) It may earn short-run economic profits. C) It produces the quantity at which MC=MR. D) It sets price like a perfectly competitive firm.
A market
a. is often a physical place b. facilitates exchanges between buyers and sellers c. typically involves monetary transactions d. might not have well-defined geographical limits e. all of the above
The 2008 credit crunch occurred when banks reduced lending in response to a. the loss of asset value for mortgage backed securities and mortgage loans. b. having too little capital to satisfy capital requirements
c. an excess of bank capital. d. an increase in the required reserve ratio.
Which of the following would shift the investment demand curve rightward?
A. an increase in business taxes B. a tax credit for new investment C. firms move from full capacity to unused capacity D. interest rates decrease