What does it mean when a firm is earning positive economic profit?
What will be an ideal response?
If a firm is earning positive economic profit, it is earning more than a normal rate of return. This will attract new firms into the industry.
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The typical shape of an isoquant is
A) linear and upward sloping. B) convex towards the origin. C) concave towards the origin. D) linear and downward sloping.
Refer to Table 16-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges each customer according to his or her willingness to pay instead of a uniform price of $7. Which of the following statements is true?
A) Julie has converted the consumer surplus (from a uniform price) into economic profit. B) Julie's has converted the producer surplus (from a uniform price) into consumer surplus. C) Julie is worse off because the demand for her services is reduced. D) Julie's customers are better off because their consumer surplus has increased.