When entry barriers are low, firms in a competitive price-searcher market
a. can expect many new rivals to enter regardless of current profitability.
b. can expect competing firms to enter the market if the activity is profitable.
c. can never earn economic profit.
d. will always be able to earn economic profit.
B
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The amount of time it takes Congress to debate the size of a tax cut is known as the
A) recognition time lag. B) action time lag. C) effect time lag. D) Ricardian-equivalence time lag.
Deadweight losses are associated with
a. taxes that distort the incentives that people face. b. taxes that target expenditures on survivor's benefits for Social Security. c. taxes that have no efficiency losses. d. lump-sum taxes.
Suppose that the extra cost to Tim of a third glass of soda is zero because he's at a restaurant that gives free refills. According to the Cost-Benefit Principle Tim should:
A. drink a third glass of soda if the extra benefit of doing so is positive. B. not drink a third glass of soda. C. drink a third glass of soda. D. drink a third glass of soda if his total benefit from drinking soda is positive.
Suppose that a community seeks to preserve air quality, and zones a “green belt” around the city, which prevents property development within the belt. What is the most likely result of this law?
A. Interest rates will increase. B. Labor income will increase. C. Economic rent will increase. D. Profits will increase.