Which is true of normal profits?
A. They are necessary to keep a firm in the industry in the long run.
B. They are excluded from a firm's costs of production.
C. They are greater than the opportunity cost to the firm.
D. They are zero under pure competition in the long run.
Answer: A
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The extra pay people earn in exchange for undertaking risky or otherwise undesirable work is called
A) a compensating differential. B) arbitrage income. C) overtime pay. D) a fringe benefit.
An increase in the income tax rate leads to a large increase in deadweight loss if ________
A) the labor supply curve is highly elastic B) the labor supply curve is perfectly inelastic C) the labor demand curve is elastic D) the labor demand curve is perfectly inelastic
What is "underground production"? Is it included in GDP?
What will be an ideal response?
When the economy suffers a temporary negative supply shock and the monetary policy makers try to stabilize economic activity in the short run, then
A) aggregate demand curve shifts rightward. B) output will be at its potential. C) inflation rate will be higher. D) all of the above. E) both A and B.