The normal rate of profit for relatively risk-free firms will be _________ the interest rate on risk-free government bonds?
Correct answer: D. approximately equal to
- A. approximately one-half
- B. smaller than
- C. larger than
- D. approximately equal to
Explanation
For a relatively risk-free business, the normal return should be close to the return on an equally safe government bond. A much higher business return would represent compensation for greater risk or an economic profit.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
Practise Microeconomics
1,742 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Microeconomics questions
In a monopoly, marginal revenue is ?
An industry that realizes such large economies of scale in producing its product that single-firm production of that good or service is most efficient is called ?
A market is defined as perfectly contestable if ?
If the ABC Typing Service is earning a rate of return greater than the return necessary for the business to continue operations, then ?
In the long run ?
The short run, as economists use the phrase, is characterized by ?