If a firm is a price taker, then it can
a. sell below the market price and increase its economic profit
b. sell all it wants at the market price
c. sell above the market price and increase its economic profit
d. supply the entire market
e. choose its own price
B
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Will a perfectly competitive firm ever produce in the short run even though it is incurring an economic loss?
What will be an ideal response?
If the reserve ratio is 12.5 percent, then $2,000 of additional reserves can create up to
a. $8,000 of new money. b. $16,000 of new money. c. $32,000 of new money. d. None of the above is correct.
According to economic reasoning, you should follow Nike's advice and "Just Do It" when
A) the additional costs are the same as the additional benefits. B) the additional costs are greater than the additional benefits. C) the additional benefits are greater than the additional costs. D) the total benefits are less than the total costs.
Figure 6-1
illustrates the four possibilities of the distribution of costs and benefits among voters for a government project. For which type would the government most likely fail to undertake many projects that would be considered efficient or productive (in other words, do too few of them relative to economic efficiency)?
a.
type A
b.
type B
c.
type C
d.
type D