Normal profit is:
A. determined by subtracting implicit costs from total revenue.
B. determined by subtracting explicit costs from total revenue.
C. the return to the entrepreneur when economic profits are zero.
D. the average profitability of an industry over the preceding 10 years.
Answer: C
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Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for frozen yogurt. Which panel describes what happens in the market for frozen yogurt when the price of ice cream, a substitute product, increases?
A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
Refer to Table 14-4. Does Alistair have a dominant strategy and if so, what is it?
A) There are two dominant strategies: if Baine increases its advertising budget, then Alistair's best bet is to keep its budget the same but if Baine does not increase its budget then Alistair should raise its advertising budget. B) Yes, Alistair should increase its advertising budget. C) Yes, Alistair should keep its advertising budget as is. D) No, there is no dominant strategy.