"When electric utilities are regulated using an average cost pricing rule, they will earn zero economic profit." Is the previous statement correct or incorrect? Why?
What will be an ideal response?
The statement is correct. An average cost pricing rule requires that the firm set its price equal to its average total cost. When price equals average total cost, the firm earns zero economic profit.
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Any allocation resulting from a mutually beneficial trade is efficient.
Answer the following statement true (T) or false (F)
Assume that the current market price is below the market clearing level. We would expect:
A) a surplus to accumulate. B) downward pressure on the current market price. C) upward pressure on the current market price. D) lower production during the next time period.
An increase in the budget deficit shifts the demand for loanable funds to the right
a. True b. False Indicate whether the statement is true or false
Given a fixed amount of time, a decision to supply labor or not is simultaneously a decision to
A. demand goods and services or not. B. demand leisure or not. C. supply capital and land or not. D. supply leisure or not.