Economic profits are equal to
A) total revenues minus total fixed costs.
B) total revenues, after tax, minus cost of goods sold.
C) total revenues minus the implicit and explicit costs of all inputs used.
D) total revenues minus the opportunity cost of labor.
C
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Limited liability can best be defined as the legal provision that
A) shields owners of a corporation from losing more than what they invested in a firm. B) protects bond holders from being sued by other creditors. C) gives holders of preferred stock priority over holders of common stock. D) reduces the exposure of sole proprietorships to law suits.
Which of the following is a true statement?
A. Firms and resource suppliers generally find it easier to reduce prices than to raise them. B. As the price level increases, interest rates will rise and therefore consumption and investment spending will also rise. C. An initial increase in aggregate demand may cause a further increase in aggregate demand because higher prices mean higher incomes. D. A decline in aggregate demand will primarily affect real output and employment if prices are inflexible downward.