Cost center managers are evaluated on their efficiency in using an input-mix to:
A. produce a stipulated level of output.
B. produce a pre-decided level of net profit.
C. generate a certain amount of return on investment.
D. generate a stipulated amount of revenue.
Answer: A
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Assume glassware is produced by firms in a competitive industry, one of which is Gregor's Glassworks.
(i) Suppose a rent increase is imposed on Gregor's Glassworks but not on its competitors. When would the rent increase cause Gregor to exit the industry? Explain. (ii) Suppose an earthquake destroys most of Gregor's stock but does not affect his competitors. When would the damages cause Gregor to exit the industry? Explain.
If the Treasury finances an expenditure by borrowing from banks with excess reserves, the money supply will
A) remain unchanged. B) rise by an amount equal to the expenditure. C) rise by a multiple of the expenditure. D) fall by a multiple of the expenditure.
Which of the following arguments for trade restrictions is often advanced?
a. Trade restrictions make all Americans better off. b. Trade restrictions increase economic efficiency. c. Trade restrictions are necessary for economic growth. d. Trade restrictions are sometimes necessary for national security.
If the interest rate is 5 percent, $100 received at the end of seven years is worth how much today?
A. 100 B. 100/(0.05)7 C. 100/(1 + 5)7 D. 100/(1 + 0.05)7