Free exit implies that
A. a perfectly competitive firm can never earn a profit.
B. the government regulates the number of firms it allows in an industry.
C. firms will always earn below normal profit, as firms can exit the industry at any time they like.
D. if an industry's existing firms make excessively high losses, firms are likely to exit the industry.
Answer: D
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Most of the goods produced in an economy are ________
A) private goods B) public goods C) club goods D) inferior goods
Suppose the majority of the shares of British Airways stock were sold to a firm in the United States. Assuming all else remains constant, this will
A) decrease the balance of the U.S. financial account. B) create a capital inflow in the United States. C) decrease foreign direct investment in the United States. D) increase net portfolio investment in the United States. E) decrease the balance of the U.S. current account.
The president of the United States promises that the nation's economy will simultaneously produce more defense goods without any decreases in the production of other goods. Under which of the following conditions could such a promise be valid?
A. if the United States were producing inside its production possibilities curve B. if the United States were producing at a point on its production possibilities curve C. if the United States were producing to the right of its production possibilities curve D. None of these; the production possibilities curve must shift to the right.
A situation in which the price charged is greater than society's opportunity cost would lead to
A. marginal cost pricing. B. too little being produced. C. an efficient amount being produced. D. too much being produced.