In considering economic profit in a market economy, it is correct to say that
A) there should never be any economic profit.
B) economic profit will only occur, even in the short run, as a result of imperfect competition.
C) economic profit performs an important function in allocating resources to their most highly valued uses.
D) economic profit tends to reduce the production efficiency of the economy, leading to wasted resources.
C
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A production subsidy combined with free trade
A) has the same deadweight costs as a tariff. B) has only consumption deadweight costs. C) has only production deadweight costs. D) None of the above.
For the purpose of calculating the consumer price index, the basket of goods
a. is kept the same from year to year so that the effects of price changes are isolated from the effect of any quantity changes that might be occurring at the same time. b. is kept the same from year to year; otherwise, the value of the index would remain constant from year to year. c. varies from year to year; otherwise, the value of the index would remain constant from year to year. d. varies from year to year so that consumers' buying patterns are updated in a timely fashion.
The demand for novels is ________ than is the demand for science textbooks because ________.
A. less price elastic; novels have less available substitutes. B. less price elastic; novels have more available substitutes. C. more price elastic; novels have more available substitutes. D. more price elastic; novels have less available substitutes.
A monopoly is a sole ____, and a monopsonist is a sole ____.
A. buyer in a product market; seller in a product market B. seller in a product market; seller in a labor market C. buyer in a product market; seller in a labor market D. seller in a product market; buyer in a labor market