One assumption of the perfectly competitive model is free entry and exit. This assumption most directly leads to the implication that:
A. firms will compete on the basis of better service rather than lower prices.
B. positive economic profit is only possible in the short run.
C. firms will have to spend money on advertising.
D. a long-run equilibrium cannot be achieved.
Answer: B
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The non-income determinants of consumption include all of the following EXCEPT
A) real wealth. B) the interest rate. C) stock of assets owned by household. D) innovation.
Consider the hypothetical supply and demand of Kidneys.
Initially, kidneys are exchanged by donations only (price=0). If the government decides to legalize kidney sales and the market reaches equilibrium, then:
A. consumer surplus remains the same. B. total surplus increases. C. a shortage of kidneys will arise. D. producer surplus remains the same.
__________ is a payment by the government to exporters to permit them to reduce the selling prices of their goods so they can compete more effectively in foreign markets.
A. Export subsidy B. Import subsidy C. Tariff D. All of these
The ________ is the percentage of a tax base that must be paid in taxes.
A. proportional tax B. tax base C. tax incidence D. tax rate structure