When a firm earns economic profit
A) accounting profits are zero.
B) market share has be capitalized.
C) other firms enter the market.
D) total revenue has been maximized.
QUESTION 2A U.S. presidential candidate promises to redistribute income and encourage economic growth. Why might these goals be in conflict?
a. The poor, on average, save more than the rich. Taxing the incomes of the rich to transfer to the poor will result in an increase in total savings.
b. Taxing the incomes of the rich to transfer to the poor will result in the rich saving more.
c. Taxing the incomes of the rich to transfer to the poor will provide disincentives for work and capital accumulation.
d. Taxing the incomes of the rich to transfer to the poor will provide incentives for the rich to work more to make up for income lost to taxes.
QUESTION 3Options are less than perfect as instruments to induce better performance because:
a. they are most often backdated.
b. they are independent of market volatility.
c. more than 90 percent of options expire worthless.
d. executives often take risky decisions to raise the value of their options.
QUESTION 4Competition is essentially the search for
A) accounting profit.
B) economic profit.
C) zero tax liability.
D) the market with the most competitors.
QUESTION 5Which of the following countries has the least degree of measured income inequality?
a. India
b. Brazil
c. Mexico
d. United States
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