A firm that is earning zero economic profits has a strong incentive to exit the industry.

A firm that is earning zero economic profits has a strong incentive to exit the industry.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 2

What is the most likely consequence when people's preference for current consumption rises in relation to future consumption?
 a. Interest rates will fall, and the rate of extraction of exhaustible natural resources will decrease.
  b. Interest rates will fall, and the rate of extraction of exhaustible natural resources will increase.
  c. Interest rates will rise, and the rate of extraction of exhaustible natural resources will decrease.
  d. Interest rates will rise, and the rate of extraction of exhaustible natural resources will increase.
  e. Interest rates will fall, and there will be no effect on the rate of extraction of exhaustible natural resources.

QUESTION 3

A production point is economically efficient as long as it lies within the production possibilities set.
  Indicate whether the statement is true or false

QUESTION 4

If an average cost curve is U-shaped, then:
 a. costs per unit remainconstant throughout the entire range of production.
  b. costs per unit fall throughout the entire range of production.
  c. costs per unit increase throughout the entire range of production.
  d. costs per unit first rise, then reach a maximum, and then begin to fall as output is increased.
  e. costs per unit first fall, then reach a minimum, and then increase as output is increased.

QUESTION 5

Economic profits in a perfectly competitive industry will encourage entry of new firms, which will shift the market supply curve to the right.
 a. True
  b. False
  Indicate whether the statement is true or false