Normal profit implies that
A. Economic profit must be negative.
B. Firms will expand their scale of production.
C. The factors employed are earning as much as they could in the best alternative employment.
D. Economic profit must be positive.
Answer: C
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Which of the following is NOT a proposition of the Heckscher-Ohlin model?
A) A country has a comparative advantage in the production of that commodity which uses more intensively the country's more abundant resource. B) The effect of international trade is to tend to equalize factor prices between the trading nations. C) If Mexico is an unskilled labor abundant country, then Mexico has a comparative advantage in the production of goods that use unskilled labor more intensively. D) If the United States is a skilled labor abundant country, then the United States has a comparative advantage in the production of goods that use skilled labor more intensively. E) Countries will completely specialize in the product in which they have a comparative advantage if free trade is allowed to occur.
Moody's Investors Service is able to make a profit because
A) most investors are irrational. B) of the existence of adverse selection problems. C) fluctuations in interest rates make default risk on corporate bonds difficult to gauge. D) small investors like the mutual funds they sell.