Suppose the market price is $5, marginal cost is $4, and average total cost is $2. The perfectly competitive firm in that market is
A) earning $3 in economic profits per unit of output and is not maximizing profits.
B) earning $2 in economic profits per unit of output and is maximizing profits.
C) earning $1 in economic profits per unit of output and is not maximizing profits.
D) none of the above: Insufficient information is given.
A
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Which of the following is likely to be observed among unemployed individuals if the government offers generous unemployment benefits?
A) Higher motivation to look for a job B) Increased acceptance of low-paying jobs C) Lower current consumption D) Reduced motivation to look for a job
Since the 1980s, Wal-Mart stores have appeared in almost every community in America. Wal-Mart buys their goods in large quantities and therefore at cheaper prices. Walmart also locates its stores where land prices are low, usually outside of the community business district. Many customers shop at Wal-Mart because of low prices and free parking. Local retailers, like the neighborhood drug store,
often go out of business because they lose customers. This story demonstrates that a. consumers are boycotting local retailers b. Wal-Mart engages in illegal acts of monopolization c. there are diseconomies of scale in retail sales d. there are economies of scale in retail sales e. Wal-Mart is managed by ruthless business people