In perfectly competitive markets, an implication of entry and exit in response to economic profit and loss is that:
A. firms will produce the quantity that minimizes average variable costs in the short run.
B. market demand is completely elastic.
C. firms will produce the quantity that minimizes average total costs in the long run.
D. firms must earn positive economic profit in the long run.
Answer: C
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Suppose we observe that both the equilibrium price of film cameras and the equilibrium quantity of film cameras have fallen. Which of the following could be responsible for this?
A) Consumers' preferences changed in favor of digital cameras. B) technological advances in film camera production C) Workers who make cameras received a pay raise. D) The price of digital cameras increased.
Which of the following is not a potential problem in using corrective taxation to deal with a negative externality?
a. Measuring the cost of the externality. b. Estimating the supply curve of the externality creator. c. Determining who is responsible for the externality. d. Determining how the tax should be applied.
Define the term budget deficit (as it applies to the federal government) and describe the difference between a cyclical deficit and a structural deficit. Provide a hypothetical numerical example to help support your answer
M1 equals currency plus demand deposits plus
a. nothing else. b. other checkable deposits. c. traveler's checks plus other checkable deposits. d. traveler's checks plus other checkable deposits plus savings deposits.