Why are expectations important when discussing profits? What effects do these profit expectations have on the economic system?
What will be an ideal response?
It is the expectation of economic profit, not its guarantee, which serves as an incentive for the entrepreneur in the economy. The expectation of economic profits encourages businesses to innovate, and this innovation contributes to economic growth. Economic profits (and losses) also guide businesses to produce products and to use resources in the way most desired by society.
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A decrease in the price level results in a(n) ________ in the quantity of real GDP demanded because a lower price level ________ consumption, investment, and net exports
A) decrease; decreases B) increase; increases C) increase; decreases D) decrease; increases
The outputs of an oligopolistic industry
A) can be homogeneous or differentiated. B) must cost above $100 on the market. C) always have excise taxes imposed on them. D) have no substitutes on the market.