Which of the Following Could Be a NEGATIVE TFP Shock

question 29

Multiple Choice

Which of the following could be a NEGATIVE TFP shock?

• A) a hurricane
• B) lower taxes
• C) a better court system
• D) lower tariff rates
• E) a low debt-to-GDP ratio

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Definitions:

Identical Firms

Companies within the same industry or market that offer products or services indistinguishable from one another to consumers.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, reflecting the actual profitability of a firm beyond accounting profit.

Equilibrium

A state of balance in a market when the quantity demanded equals the quantity supplied, leading to no further incentive to change.

Short Run

A time period during which at least one factor of production is fixed, limiting the capacity to adjust fully to market conditions.