Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in Wyoming start purchasing their cigarettes in surrounding states. Which of the following principles does this best illustrate?
a. People respond to incentives.
b. Rational people think at the margin.
c. Trade can make everyone better off.
d. Markets are usually a good way to organize economic activity.
a
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If the present value of all future revenue is positive, then
A) the firm should remain operating, even if it earns negative profit in the short run. B) the firm should shut down if it is earning a negative profit in the short run. C) the firm should shut down if it cannot cover its fixed costs in the short run. D) Unable to determine with the information given.
Which of the following facts about competitive ideas is true?
a. A successful competitive idea should be big in terms of investment. b. A competitive idea is usually built on a foundation of other ideas. c. A competitive idea should necessarily be scientific. d. A successful competitive idea must be original.