Economic Theories

question 21

Multiple Choice

Economic theories

• A)can be used to help explain and predict economic behaviour.
• B)cannot be tested because we cannot do economic "experiments".
• C)must apply to all economies to be true.
• D)are not useful because of the unrealistic assumptions they contain.
• E)cannot help to predict future behaviour.

Understand the relationship between total revenue, total profit, and output levels.

Recognize the impact of market entry and exit on industry prices and profits in the long run.

Differentiate between accounting profit and economic profit.

Describe the characteristics of a perfectly competitive market.

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Definitions:

Managed Investment Companies

Firms that invest pooled funds from clients, taking on the responsibility of investment decisions and management for those funds.

Closed-end Funds

Investment funds that have a fixed number of shares which are not redeemable from the fund. Instead, the shares can be purchased or sold only in the market, at their current market price.

Unit Investment Trusts

An investment company offering a fixed portfolio of securities in a one-time public offering, with units redeemable on demand.

Short-selling

The practice of selling securities or other financial instruments that are not currently owned, with the intention of repurchasing them later at a lower price.