A firm that generates zero economic profit usually has
A) negative business profit.
B) zero business profit.
C) positive business profit.
D) business profit equal to half the total revenue.
C
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"For a given supply curve, the excess burden of a tax will be greater when the demand for a product is less elastic than when the demand is more elastic." This statement is
A) incorrect. The statement confuses demand with quantity demanded. B) correct. C) incorrect because the incidence of the tax, not the burden of the tax, is affected by the elasticity of demand. D) incorrect. When demand is less elastic, the burden of the tax is smaller than when the demand is more elastic.
Assume the marginal propensity to consume (MPC) is 0.80 and the government increases taxes by $100 billion. The aggregate demand curve will shift to the:
a. left by $80 billion. b. right by $200 billion. c. right by $400 billion. d. left by $400 billion.