Suppose Winston's annual salary as an accountant is $60,000, and his financial assets generate $4,000 per year in interest. One day, after deciding to be his own boss, he quits his job and uses his financial assets to establish a consulting business, which he runs out of his home. To run the business, he outlays $8,000 in cash to cover all the costs involved with running the business, and earns revenues of $150,000. What are Winston's accounting profits?
A. $150,000
B. $138,000
C. $142,000
D. $78,000
Answer: C
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From the late 1930s until the early 1970s, courts tended to follow per se rules when deciding antitrust cases. According to these rules,
a. a firm's control of a large market share was considered intrinsically illegal. b. the existence of only one or two firms in an industry was not necessarily an antitrust violation. c. both market share and predatory practices must be considered in determining whether a firm had violated the law. d. the court should only intervene if the firm charged "unfair" prices.
Entrepreneurs differ from managers because
a. they use innovation to gain advantage over their competitors. b. managers use established managing styles; entrepreneurs do not. c. entrepreneurs tend to take more risk than managers. d. All of the above are correct.
When demand is perfectly inelastic, the demand curve will be
a. negatively sloped, because buyers decrease their purchases when the price rises. b. vertical, because buyers purchase the same amount as before whenever the price rises or falls. c. positively sloped, because buyers increase their purchases when price rises. d. positively sloped, because buyers increase their total expenditures when price rises.
A transaction cost associated with spot trading is:
a. travel to and from the market. b. shipping costs. c. brokerage commissions. d. the spread, which is earned mostly by large banks.