In the long run, firms in a perfectly competitive market will:
A. earn positive economic profits.
B. exit if the price is lower than their lowest average total cost.
C. attract other firms to the market if the price is equal to their lowest average total cost.
D. not attract other firms if they are earning slightly positive economic profits.
Answer: B
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Which of the following would be the most likely candidate for direct application of the benefits principle of taxation?
A. Education B. Fire protection C. Police protection D. Use of roads
Data for an economy shows that the unemployment rate is 10%, the participation rate 80 percent, and 200 million people 16 years or older are not in the labor force. How many people are in the working-age population in this economy?
A. 800 million B. 250 million C. 1.6 billion D. 1.0 billion
Convergence theory suggests that when less developed countries begin to develop, they typically have higher growth rates as they catch up with more developed nations.
Answer the following statement true (T) or false (F)
Suppose that nominal GDP in year 1 is 200 and nominal GDP in year 2 is 242. Assume that inflation is ten percent per year. How fast did the economy grow between these two years?
A. 10 percent B. 12 percent C. 21 percent D. 42 percent