Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000 . He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%. Abdul's annual implicit cost of capital is
a. $8,000.
b. $4,000.
c. $2,000.
d. $1,000.
d
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Suppose you are offered a new smartphone in exchange for thirty hours of your work in your friend's garden. This is an example of
A) money as a standard of deferred payment. B) barter. C) money as a medium of exchange. D) money as a store of value.
Economics is best defined as the social science that studies
A) how a person can get everything he or she wants. B) how choices made in the social interest must conflict with choices made in the self-interest. C) the way to eliminate choices in our decisions. D) the choices that societies, and the people and institutions that make up societies, make in dealing with the issue of scarcity. E) the reason money exists.
The above figure shows the U.S. market for replacement cell phone batteries. Area E is the
A) producer surplus when there is free trade. B) deadweight loss from tariff. C) tariff revenue. D) increase in producer surplus due to the tariff. E) gain in total surplus due to the tariff.
Engineers for The Giffen Record Company determine that a 30% increase in all compact disc inputs will cause a larger percentage increase in output. Assuming that input prices remain constant, you correctly deduce that such a change in inputs will cause ________ as output increases.
A. marginal costs to increase B. average costs to decrease C. average costs to remain constant D. average costs to increase