Suppose a farmer raising beef is making a normal profit. Then, because of a scare about mad cow disease, the demand for beef decreases drastically. What happens to the profits of the beef farmer in the short run and in the long run?
What will be an ideal response?
In the short run, the fall in beef prices will decrease the farmer's profits. With the fall in price, the farmer will incur an economic loss. If the price is high enough so the revenue covers the farmer's variable costs, the farmer will continue to operate. In the long run, if demand continues to remain depressed, some farmers will exit the market until the remaining farmers earn a normal profit once again.
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The period for which the Consumer Price Index is defined to equal 100 is called the
A) base period. B) starting point. C) beginning period. D) zero period. E) reference base period.
In a monopolistically competitive market, entry into the industry
A) is relatively easy. B) is blocked. C) is difficult due to extensive government regulation. D) is as difficult as entry into a monopoly.
Combating the "greenhouse effect" has classic free-rider problems
a. True b. False Indicate whether the statement is true or false
Based on the fact that the companies Ford, IBM, PepsiCo, and McDonald's own and operate producing units in many different countries, they are categorized as:
a. joint ventures. b. sole proprietorship firms. c. partnership firms. d. multinational firms. e. co-operative firms.