10 Questions
What is the main difference between economic profit and normal profit?
Normal profit is the minimum profit required to stay in business, while economic profit is the excess.
What is the main characteristic of a neoclassical firm?
It is a single-product firm with a single objective of profit maximization.
According to New Institutional Economics, what is the conception of the firm?
A multi-product firm with multiple objectives and bounded rationality.
What is the main difference between a neoclassical firm and a real business firm?
A neoclassical firm ignores the internal organization, while a real business firm considers it important.
What is the paradox of profits in a competitive market?
Firms can earn no economic profit in the long run.
What is the main objective of a real business firm?
Growth and manager's utility.
What is the origin of New Institutional Economics?
It originated in the 50's-60's with the works of Ronald Coase.
What is the characteristics of a real business firm in terms of information?
It has bounded rationality.
What is the main difference between a neoclassical firm and a real business firm in terms of the environment?
A neoclassical firm has a stable environment, while a real business firm has a complex and changing environment.
What is the role of the entrepreneur in a real business firm?
The entrepreneur has an important role.
Learn about the basics of Neoclassical Economics, a school of economic thought that originated in the 19th century. Discover its key principles and how it differs from Classical Economics. Test your knowledge of this important economic theory!
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