If a competitive firm routinely earns a larger profit than the "normal profit" for its industry,
A. the firm's owners are likely to withdraw from the industry in order to retire early.
B. the firm will continue to earn its "normal profits" far into the future.
C. new firms are likely to enter the industry, pushing up the prevailing market price.
D. new firms are likely to enter the industry, depressing the prevailing market price.
Answer: D
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Indicate whether the statement is true or false
Random walk theory says
A. throwing darts will pick winners. B. random selection of stocks will do as well as other methods of stock choice. C. speculation cannot lose if you wait long enough. D. investment in stocks cannot be profitable.
Suppose the nominal interest rate is 7 percent annually, and you deposit $1,000. Inflation in the economy throughout the year is 7 percent. At the end of the year, you have earned:
A. an increase in your purchasing power. B. no increase in your purchasing power. C. no increase in your savings. D. a decrease in your purchasing power.
Two goods are complements when a decrease in the price of one good
a. decreases the quantity demanded of the other good. b. decreases the demand for the other good. c. increases the quantity demanded of the other good. d. increases the demand for the other good.