Most economists today believe that the Phillips curve is
A. vertical in the short run but downward sloping in the long run.
B. upward sloping in the short run but vertical in the long run.
C. downward sloping in the short run but vertical in the long run.
D. vertical in the short run but upward sloping in the long run.
Answer: C
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A Nash equilibrium occurs when
A) each firm is doing the best it can given its opponents' actions. B) each firm chooses the strategy that maximizes its minimum gain. C) a player can choose a strategy that is optimal regardless of its rivals' actions. D) there is no dominant firm in a market.
A tax in an efficient market:
A. increases efficiency. B. decreases total surplus. C. maximizes total surplus. D. often fails to generate revenue.
Some argue that "financing an investment with your own personal funds is always less expensive than borrowing the funds from a bank because it's an interest-free loan.". To an economist, this argument
a. is true because borrowed funds involve an explicit cost, while use of one's own funds involves only an implicit cost b. ignores the opportunity cost associated with using one's own funds c. is false because the bank can always match the interest rate offered on the loanable funds market d. is true only if the investment generates less revenue than the revenue generated by the interest-bearing deposit in the bank e. ignores the cost of sacrificing present consumption
Zach withdrew $400,000 out of his personal savings account and used it to start his new cookie business. The bank account pays 3 percent interest per year. During the first year of his business, Zach sold 6,000 boxes of cookies for $2.50 per box. Also during the first year, the cookie business made monetary outlays of $9,000. You may assume that there is no opportunity cost to Zach’s time.
a. Zach's accounting profit for the year was? b. Zach's economic profit for the year was?