Answer the following statements true (T) or false (F)
1. According to the circular flow model of the market system, when resource-owners' money income is rising, then the costs to business firms must be falling.
2. Have a high fixed salary is what motivates entrepreneurs to make prudent decisions is dealing with business risk.
3. Government bailouts of failing businesses, like banks during the recent economic crisis, will tend to reduce the motivation among entrepreneurs to make prudent decisions is dealing with business risk.
4. College graduates who dislike business risk will mostly seek to be hired by firms as labor, rather than starting their own firms.
1. FALSE
2. FALSE
3. TRUE
4. TRUE
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Economic profit is the difference between total revenue and
A) the normal profit. B) interest costs of production. C) opportunity costs of production. D) the costs of resources bought in markets.
Refer to Figure 12.4. Since the housing bubble burst and the economy returned to its initial, pre-bubble level before the corrective policy changed output, the economy actually moved from ________ after the bubble burst
A) point A to point B B) point B to point D C) point A to point C D) point C to point B