The AB Manufacturing Company has hired an economist to evaluate its financial situation. She explains to the board of directors that the company is making zero economic profit. Should the company go out of business?
The company should remain operating. Earning zero economic profit implies that the firm has an accounting profit equal to what the firm could be making at its highest valued alternative. A situation where zero economic profit is made would be considered normal.
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If the demand curve of a perfect competitor is tangent to (just touching) the firm's average total cost curve,
A. the firm is definitely in the short run. B. the firm is probably in the short run. C. the firm is definitely in the long run. D. the firm is probably in the long run.
In economics, the context in which decisions are presented is referred to as:
A. choice architecture. B. self-confirming equilibrium. C. enlightened self-interest. D. shadow prices.
Other things constant, if domestic consumers purchase fewer foreign goods at each level of GDP in the short run:
A. GDP will rise B. GDP will fall C. Foreign countries' GDP will rise D. There will be no change in GDP in this country
Refer to Scenario 6.1. Suppose the friends are forced by government to combine their businesses and share what they make. With this revision to the scenario, the Nash equilibrium occurs where
A) both Tasha and Gloria work extremely hard. B) both Tasha and Gloria work somewhat hard. C) Both A and B represent Nash equilibria. D) There is not a Nash equilibrium in this scenario.