Pat used to work as an aerobics instructor at the local gym earning $35,000 a year. Pat quit that job and started working as a personal trainer. Pat makes $50,000 in total annual revenue. Pat's only out-of-pocket costs are $12,000 per year for rent and utilities, $1,000 per year for advertising and $3,000 per year for equipment.Pat's accounting profit is ________, and Pat's economic profit is ________.
A. $15,000; ?$1,000
B. $34,000; $15,000
C. $50,000; $15,000
D. $34,000; ?$1,000
Answer: D
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a. total revenue b. utility c. economic profit d. cost e. production efficiency
When some people do not act rationally, others can profit from that irrationality.
Answer the following statement true (T) or false (F)
An increase in the price of input used to produce a product will lead to
A. a decrease in quantity supplied of that product B. a decrease in the supply of that product. C. a decrease in the demand for that product. D. an increase in the supply of that product.
The Fed can induce banks to increase their reserve holdings by:
A. Increasing the discount rate B. Reducing the required reserve ratio C. Increasing the interest on reserves D. Selling securities in the open market