Answer the following statement(s) true (T) or false (F)
1. A firm earns a positive economic profit when the market price exceeds its marginal cost.
2. As long as profits remain positive, a firm will want to increase the quantity produced.
3. Only variable costs are relevant to a firm's decision to shut down.
4. When a firm has chosen to shutdown it has exited the industry.
5. A competitive firm will exit the industry in the long run if the price of its product falls below its average cost.
1. False
2. False
3. True
4. False
5. True
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Which of the following items is not a component of the expenditure approach to measuring U.S. GDP?
A) purchases of food made by families B) Social Security payments made by the government C) purchases of U.S.-made movies by Europeans D) purchases of new homes made by families
ABC:
A. has been very successful because the use of this technique has no opportunity cost. B. has been very unsuccessful because those who undertake it are those who are being evaluated. C. has been very successful because the interests of those who undertake it and those who are being evaluated are aligned. D. has been very unsuccessful because it lays too much emphasis on quality management.