Sunk costs are irrelevant for decisions about future actions because ______.
a. the money has been spent and cannot be recovered to use again
b. the money has not been spent yet, so the amount is not known
c. they only affect a firm in the short run, not the long run
d. they may or may not be applicable under future conditions
a. the money has been spent and cannot be recovered to use again
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A decrease in the demand for a good generally implies that:
a. consumers are willing to buy larger quantities of the good at each price. b. the demand curve for the good has shifted to the right. c. consumers are willing to pay a higher price for each unit of the good. d. the demand curve for the good has become steeper. e. the demand curve for the good has shifted to the left.
Suppose you conduct a study in which subjects are asked the following questions: 1. "Imagine that you have decided to go to a basketball game where the cost is $25 per ticket. As you enter the arena, you discover that you have lost your $25. Would you still pay $25 for a ticket?" 2. "Imagine that you have decided to go to a basketball game and you pay $25 for the ticket. As you are walking into the arena you realize that you have lost your ticket. Would you pay another $25 for another ticket?" You find that 90% of your subjects answered "Yes" to the second question, compared to the 50% that answered "Yes" to the first question. This is an example of:
A. the default effect. B. the endowment effect. C. narrow framing. D. dynamic inconsistency.
The decrease in the price of gasoline to a national average of less than $2.5 during the summer of 2020 was most likely a result of
A. an increase in supply resulting from higher refinery output along with a decrease in demand in summer driving. B. an increase in demand due to increase in summer driving along with a decrease in supply resulting from reduced refinery output. C. an increase in demand due to reduced summer driving. D. an increase in supply resulting from higher refinery output.
Using the fiscal year 2020 estimates, the largest component of state and local revenue is the
A. revenue from the federal government. B. corporate income tax. C. individual income tax. D. sales, excise, and gross receipts taxes.