Assume that the LCD and plasma television sets industry is perfectly competitive. Suppose a producer develops a successful innovation that enables it to lower its cost of production. What happens in the short run and in the long run?
A) The firm will probably incur losses temporarily because of the high cost of the innovation, but in the long run it will start earning positive profits.
B) The firm will be able to increase its economic profits temporarily, but in the long run its economic profits will be eliminated as other firms copy the innovation.
C) Initially, the firm will be able to increase its profit significantly, but in the long run its profits will still be greater than zero but lower than its short-run profits because other firms would also innovate.
D) This firm will be able to earn above normal profits indefinitely if it obtains a patent for its innovation.
B
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Changes in interest rates cause the same rotations of intertemporal budget lines regardless of whether you are a borrower or a saver.
Answer the following statement true (T) or false (F)
Which of the following will cause a rightward shift of the demand curve?
A) a decrease in the cost of production B) a decrease in the price of the good C) an increase in the expected future price of the good D) all of the above
Refer to the table below. If the discount rate is 5 percent and the cost of the investment is $43,000, which of the following is true regarding a profit-maximizing manager?
The above table shows the future operating profits from an investment. The future operating profits are earned at the end of each of the respective years.
A) The manager should not make the investment because the net present value is positive.
B) The manager should make the investment because the net present value is positive.
C) The manager should not make the investment because the net present value is negative.
D) The manager should make the investment because the net present value is negative
Which of the following does not appear in GDP as a part of government spending?
A. Clipboards at the Department of Motor Vehicles. B. Maintenance of government buildings. C. Social Security payments. D. City fireworks displays on the Fourth of July.