A perfectly competitive firm in a constant-cost industry produces 1,000 units of a good at a total cost of $50,000. If the prevailing market price is $48, the number of firms and the industry's output will decrease in the long run
Indicate whether the statement is true or false
TRUE
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Define the normal rate of return. If a business has fairly steady revenues and the future looks secure, what should the normal rate of return equal? Why?
What will be an ideal response?
A network effect exists whenever
A) a firm's willingness to produce a particular good or service is influenced by the costs of inputs it must utilize in order to manufacture the item. B) a consumer?s willingness to purchase a particular good or service is influenced by how many others also buy or have bought the item. C) a firm's willingness to purchase a particular factor of production depends on the other types of inputs it utilizes to manufacture an item. D) a consumer's willingness to purchase a particular good or service is influenced by the prices of other complementary or substitute items.
The substitution effect of a(n)
a. price increase works to reduce the quantity of the good demanded b. price increase works to increase the quantity of the good demanded c. price decrease works to reduce the quantity of the good demanded d. income increase works to reduce the quantity of the good demanded e. income decrease works to reduce the quantity of the good demanded
A U.S. retailer buys shoes from an Italian company. The Italian firm then uses all of the revenues to buy leather from the U.S. These transactions
a. increase both U.S. net exports and U.S. net capital outflow. b. decrease both U.S. net exports and U.S. net capital outflow. c. increase U.S. net exports and do not affect U.S. net capital outflow. d. None of the above is correct.