If a firm is forced to take external costs into account, it will
A. increase production and charge a lower market price.
B. reduce prices and hire more workers.
C. reduce prices and hire fewer workers.
D. reduce production and charge a higher market price.
Answer: D
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If the owners of a business are receiving total revenues just sufficient to cover all of their explicit and implicit costs, then they are:
A. earning a normal profit. B. doing better than their next best alternative. C. doing worse than their next best alternative. D. earning an economic loss.
Governments regulate natural monopoly by capping the price at _____
A. marginal revenue and allowing the monopoly to maximize profit B. marginal cost so that the monopoly is efficient and makes zero eco-nomic profit C. average total cost, which allows the monopoly to be inefficient but make zero economic profit D. the buyers' willingness to pay, which makes the monopoly operate efficiently
A conglomerate occurs when:
a. the products of the merging firms were not related in any manner before the merger b. one firm is a producer of products, and the other firm is a producer of services c. one firm is a domestic firm, and the other is a foreign company d. the firms stood in a buyer-seller relationship before the merger e. the merger partners were competitors
Supply-side economics
A. promotes reducing taxes to create incentives to increase productivity. B. promotes expansionary fiscal policy by simultaneously increasing taxes and government spending. C. is based on the Ricardian equivalence theorem. D. is based on the crowding-out effects.