pre-ch questions 9
Any force that prevents firms from entering a new market is called
a barrier to entry.
Accounting profit is the difference between
a firm's total revenue and its explicit costs.
Economic profit is the difference between
a firm's total revenue and the sum of its explicit and implicit costs.
Economic rent is the part of the payment for a factor of production that is _____ the owner's reservation price.
above
Fill in the blank question. Any force that prevents firms from entering a new market is called a __________ to entry.
barrier
Price controls are often designed to help the poor, but the fact that they reduce total economic surplus means that alternative policies such as direct income transfers to the poor:
could make everyone better off
In general, price subsidies will _____ total economic surplus. Multiple choice question.
decrease
The individual pursuit of self-interest _____ with the broader interests of society.
does not always coincide
The difference between a firm's total revenue and the sum of its explicit and implicit costs is the firm's
economic profit
If the government were to subsidize the price of cars, it's likely that total economic surplus would
fall
True or false: Economists do not believe that it's important to address poverty and inequality because all that matters is whether the market is efficient.
false
The opportunity costs of all the resources supplied by a firm's owners are the firm's
implicit costs
When the market is _____, there are no further opportunities for gain available to individuals.
in equilibrium
One reason that firms have a strong incentive to develop cost-saving innovations is that these innovations enable the firm to earn an economic profit
in the short run.
The existence of positive economic profit in the long run creates an incentive for:
new firms to enter the market.
The broader interests of society are _____ promoted by the individual pursuit of self-interest. Multiple choice question.
not always
If the total economic surplus from a market is thought of as a pie to be divided among the participants in the market, then imposing price controls will:
reduce the size of the pie
The part of the payment for an input that is above the owner's reservation price is economic ____.
rent
A firm's explicit costs include
the actual payments a firm makes to its factors of production.
A firm that adopts a new cost-saving innovation will earn an economic profit in
the short run
Economists believe that
there are important social goals besides economic efficiency.
When the market is in equilibrium, there are _____ opportunities for gain available to individuals.
no further
When the market is in equilibrium, there are _____ opportunities for gain available to individuals. Multiple choice question.
no further
