A manufacturing company designs and produces an incredibly efficient solar heating system for large buildings and earns very large profits on it. Which of the following is true?
A. The profits this firm earns aren't deserved, as the firm did not take any risks.
B. The profits this firm earns are a return for an innovation.
C. This firm must not be in a competitive market if it was able to earn a profit.
D. both A and C
Answer: B
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A production indifference curve shows all combinations of input quantities capable of producing a given quantity of output.
Answer the following statement true (T) or false (F)
Which of the following can cause official unemployment figures to underestimate the true unemployment rate?
A) Some people get discouraged and quit looking for a job. B) Some people engage in illegal activities. C) Some people work "off the books." D) Some people work overtime.
The sum of the current account, the capital account, and the official reserve transaction account is
A) always positive. B) always negative. C) positive when exports are greater than imports. D) zero.
Which of the following is the most accurate statement about the effects of quality change on the CPI?
a. Even though the BLS adjusts the prices of products in the CPI basket when the quality of the products changes, changes in quality are still a problem because quality is so hard to measure. b. Because the BLS adjusts the prices of products in the CPI basket when the quality of the products changes, changes in quality are no longer a problem for the CPI. c. The BLS does not adjust the CPI for quality changes. d. Most economists believe that changes in the quality of goods included in the CPI basket do not bias the CPI as a measure of the cost of living.