With regard to its economic profits and economic losses, how is the short run different from the long run for a perfectly competitive firm?
What will be an ideal response?
The firm can make an economic profit, incur an economic loss in the short run, or make zero economic profit in the short run. In the long run, however, the only possible outcome is zero economic profit. An economic profit attracts entry by new firms and economic losses lead to exit by some firms. Thus, after entry or exit is complete in the long run, the remaining firms will make zero economic profit.
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Legal ceilings on the rate of interest charged to individuals
A) guarantee credit is allocated according to need rather than ability to pay. B) make it easier for people with poor credit ratings to obtain loans. C) reduce the probability corporations will obtain scarce credit by bidding funds away from consumers. D) accomplish all of the above. E) accomplish none of the above.
Suppose the government want to increase aggregate demand without increasing interest rates. You would recommend
a. reducing transfer payments and increasing the money supply. b. increasing government spending and reducing the money supply. c. increasing taxes and the money supply. d. increasing government spending and the money supply.
The federal government facilitated suburbanization by providing _______________ and ___________________.
Fill in the blank(s) with the appropriate word(s).
More than 10,000 visitors waited up to two hours in line to see the rare flower titan arum at the Cambridge Botanical Gardens. What does this situation illustrate to an economist about rationing?
A. When goods are not fully rationed by monetary price, other rationing mechanisms such as waiting arise. B. There is no need for rationing if anyone who waits long enough can see the flower. C. When goods are not rationed by monetary price, other rationing mechanisms such as lottery must be introduced. D. Goods don't have to be rationed by lottery or first-come, first-served. Goods can be rationed by price.