If a firm is making zero economic profit, it
a. will be forced to shutdown and leave the market.
b. will also generally be making zero accounting profit.
c. is doing as well as typical firms in other markets.
d. will not survive in the long run.
C
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Suppose that the market price of good X equals the firm's cost of producing that good, but it does not reflect any costs imposed on society. Which of the following is FALSE?
A) The good is priced too low. B) An external benefit is associated with good X. C) Resources are over-allocated in the production of good X. D) Too much of good X is being produced.
An external benefit is a benefit from an activity that falls on a third party who is not a party to the activity
a. True b. False
In his article, "The Nature of the Firm," Ronald Coase
a. suggested that monopolies may be more innovative than competitive firms b. argued that the economy should be organized into one large firm c. provided an answer to the question, "Why do firms exist?" d. focused on the concept of adverse selection e. analyzed concentration in U.S. industry
Police protection is a private good
Indicate whether the statement is true or false