Which of the following statements is TRUE about the economic profits earned by a monopolistic competitor firm in the long run?
A) Economic profits can be positive since firms have some degree of monopoly power.
B) Economic profits will be positive since the firm has a downward sloping demand curve.
C) Economic profits will tend towards zero since positive profits will attract new firms into the industry.
D) Economic profits can be negative since there is so much competition in the market.
Answer: C
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Capital is a factor of production. Which of the following is an example of capital?
i. $1,000 in money ii. 100 shares of Microsoft stock iii. $10,000 in bonds issued by General Motors iv. a drill press in your local machine shop A) i and ii B) ii only C) iii only D) iv only E) ii and iii
The reform movements that began in many Latin American economies in the late 1980s favored
A) competitive devaluations. B) stronger military budgets. C) imports substitution policies. D) a stronger role for markets and more openness. E) more government regulation of industry.
Which of the following is likely to have the narrowest bid-asked spread?
A) A Nasdaq stock B) A U.S. Treasury bill C) A corporate bond D) A Fannie Mae bond
A five-cent deposit on beer bottles
A) provides a positive incentive because it rewards people for recycling. B) provides a negative incentive because it punishes people who do not recycle. C) is an irrational policy, because it fails to take into account incentives. D) is an irrational policy, because it fails to take into account self-interest.