In monopolistically competitive markets, free entry and exit suggests that
a. the market structure will eventually be characterized by perfect competition in the long run.
b. all firms earn zero economic profits in the long run.
c. some firms will be able to earn economic profits in the long run.
d. some firms will be forced to incur economic losses in the long run.
b
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Minimum efficient scale is defined as the level of output at which
A) the firm's long-run average total cost starts falling. B) all economies of scale are exhausted. C) the maximum output is produced. D) diminishing returns affect average total cost.
Define the benefit principle. List two real world taxes that have the features of a tax based on the benefit principle. Why can't the benefit principle be the sole principle of taxation?
What will be an ideal response?
The proper economic method of selecting a sentence length would be to
A. compare the average cost of crime being perpetrated by the average offender if released a year earlier with the average incarceration costs for that shorter sentence. B. compare the total cost of crime being perpetrated by the offender if released a year earlier with the incarceration costs for that shorter sentence. C. poll pro bono defense attorneys and follow their recommendation. D. compare the reduction in the total cost of (marginal cost) crime being perpetrated by the offender if released a year earlier with the reduction in incarceration costs (marginal benefit) for that shorter sentence.
If the federal government wishes to move the economy out of a recessionary gap, the appropriate fiscal policy is a(n)
A. increase in taxes. B. decrease in government purchases. C. decrease in transfer payments. D. None of the above is correct.