In reality, decisions made by firms may not always produce maximum total profit because some executives
a. are more motivated by altruism.
b. are more interested in market share than profits.
c. may push research and development to the point that profits decline.
d. All of the above are correct.
d
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Suppose that a regulatory agency has imposed marginal cost pricing on a natural monopolist. We expect that
A) the firm will earn only a normal profit. B) the firm's average total cost of production is rising over the relevant range of production. C) the firm will earn economic profits. D) the firm will eventually go out of business.
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real GDP and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. There is not enough information to determine what happens to these two macroeconomic variables. b. Real GDP rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). c. Real GDP rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). d. Real GDP falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). e. Real GDP and net nonreserve-related international borrowing/lending remain the same.