In the long run, if price is less than average cost
A) there is an incentive for firms to exit the market.
B) there is profit incentive for firms to enter the market.
C) the market must be in long-run equilibrium.
D) there is no incentive for the number of firms in the market to change.
Answer: A
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Real GDP is preferred to nominal GDP as a measure of economic performance because:
A. nominal GDP uses current prices and thus may over- or understate true changes in output. B. nominal GDP only includes goods and excludes services. C. nominal GDP is not adjusted for population changes. D. real GDP accounts for changes in the quality of goods and services produced.
The government of an island nation is running a contest to see who can design a highly efficient desalination machine. The winner will get a contract to build and install the machines in every city along the coast, as well as a $10 million dollar grant for further research. This government is investing in ______.
a. new growth theory b. technology c. human capital d. physical capital