Tina wants to be a rock 'n' roll singer. She cashed in all of her bank accounts that were paying her 2%interest. She took this $5,000

and spent it to produce a CD. Tina did not quit her day job at Abercrombie. After one year her CD sales had earned $2,000

in accounting profits. Tina's economic profits are

A.

$100.

B.

$2,100.

C.

$1,900.

D.

$3,000.

A business owner should leave an industry when

A.

economicrevenuesarenegative.

B.

revenuesaregreaterthanallopportunitycosts.

C.

additionalbenefitsarelessthanadditionalopportunitycosts.

D.

revenuesareequaltoopportunitycosts.

If your business earns revenues of $75,000, has total obvious costs of

$25,000, and normalprofits of $35,000, you are likely to

enter

leave

the industry.

With economiclosses,

A.

businesses

expandandenter

the industry,

demandincreases,

pushing quantities sold

down

and prices

up,

until prices just cover all opportunity costs of production and economic profits are zero.

B.

businesses

leave

the industry, demand increases, pushing quantities sold

up

and prices

down,

until prices just cover all opportunity costs of production and economic profits are zero.

C.

businesses

leave

the industry,

supplydecreases,

pushing quantities sold

down

and prices

up,

until prices just cover all opportunity costs of production and economic profits are zero.

D.

businesses

expandandenter

the industry,

supplyincreases,

pushing quantities sold

up

and prices

down,

until prices just cover all opportunity costs of production and economic profits are zero.

Economists use the term longrun market equilibrium to describe a market where

A.

quantity demanded equals quantity supplied,

buteconomicprofitsmaybepositive,negative,orzero.

B.

quantity demanded is

less

than quantity supplied,

buteconomiclossesorprofitscanleadtochangesinsupply.

C.

quantity demanded equals quantity supplied,

economicprofitsarezero,andthereisnotendencyforchange.

D.

quantity demanded is

greater

than quantity supplied,

economicprofitsarezero,andthereisnotendencyforchange.