Which of the Following Is Primarily a Function of the Federal

question 129

Multiple Choice

Which of the following is primarily a function of the federal government?

• A) Increasing the money supply in the economy
• B) Ensuring that firms maximize profits
• C) Promoting the growth of natural monopolies
• D) Providing home mortgage loans
• E) Dealing with externalities

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Definitions:

Accounting Profit

Sales minus explicit cost. Implicit costs are not considered.

Perfect Competition

A market structure characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information, where no single entity can influence market prices.

Economic Profits

The surplus obtained when a firm’s total revenues exceed both its explicit and implicit costs, providing a full picture of its financial health.

Short Run

A period in economics during which some factors of production are fixed, limiting the ability of a business to adjust to market changes.