Which of the following is true concerning purely competitive industries?
A. There will be economic losses in the long run because of cut-throat competition.
B. Economic profits will persist in the long run if consumer demand is strong and stable.
C. In the short run, firms may incur economic losses or earn economic profits, but in the long
run they earn normal profits.
D. There are economic profits in the long run but not in the short run.
Answer: C
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Refer to the scenario above. Suppose the cost of advertising in this industry is very high and each company will incur a cost of $3 million annually if they choose to advertise. Which of the following is true in this case?
A) Company A's best response is to advertise if Company B advertises. B) Company B's best response is to advertise irrespective of what Company A does. C) Company A's dominant strategy is to advertise. D) This game does not have a dominant strategy equilibrium.
Consider an identical basket of goods in both the U.S. and Taiwan. For a given nominal exchange rate, in which case is it certain that the U.S. real exchange rate with Taiwan falls?
a. the price of the basket of goods rises in the U.S. and Taiwan. b. the price of the basket of goods rises in the U.S. and falls in Taiwan. c. the price of the basket of goods falls in the U.S. and rises in Taiwan. d. the price of the basket of goods falls in both the U.S. and Taiwan.
When there is only one buyer of labor in a community, we talk of a
A. monopsony. B. labor cooperative. C. monopoly. D. monopolistic market.
All of the following factors are held constant when price changes on a demand curve except:
A) income. B) quantity demanded. C) population. D) tastes and preferences.