If Economic Profits in a Particular Industry Increase, Then We

question 169

Multiple Choice

If economic profits in a particular industry increase, then we would expect

• A) resources to be diverted away from that industry.
• B) firms in that industry to produce less output.
• C) firms to enter that industry, thus expanding it.
• D) consumers to buy less from that industry.

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Definitions:

Zero-coupon Bond

A bond that does not pay periodic interest, but is sold at a deep discount from its face value and redeemed at full value at maturity.

Rate of Return

The returns or setbacks realized from an investment over a certain time period, expressed as a percentage of the initial capital invested.

Yield to Maturity

The total return anticipated on a bond if the bond is held until it matures, factoring in all interest payments made over time.

Zero-coupon Bond

A bond that does not pay interest during its life and is sold at a discount from the face value, which is paid to the holder at maturity.