In the long run, if some monopolistically competitive firms are earning economic losses then
A. firms will leave the industry.
B. raise prices until they earn economic profits.
C. new firms will enter the industry.
D. they will increase production until marginal costs fall.
Answer: A
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Suppose a bank has the following balance sheet:
Assets Liabilities Reserves $14,000 Deposits $100,000 Loans $90,000 Net Worth $4,000 If the required reserve ratio is 10 percent, how much excess reserves does the bank have? What is the maximum amount that the bank can expand its loans?
For the firm, the major goal of profit sharing plans is to:
A. force workers to incur some of the business risk. B. overcome the monopsony problem of having to pay higher wages to attract additional workers. C. overcome the principal-agent problem by better aligning the workers' interests with those of the firm. D. reduce total compensation payments.