An Example of Normative Analysis Is Studying

question 200

Multiple Choice

An example of normative analysis is studying

• A)how market forces produce equilibrium.
• B)surpluses and shortages.
• C)whether equilibrium outcomes are socially desirable.
• D)income distributions.

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Definitions:

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the financial health of a business.

Long-Run Equilibrium

A state in which all factors of production and outputs in an economy have fully adjusted and all changes are reflected in prices.

Marginal Revenue Curve

Illustrates how marginal revenue changes as the quantity of output sold changes.

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogeneous product, perfect information, and no barriers to entry or exit.