Joe runs a restaurant. He pays his employees $200,000 per year. His ingredients cost him $50,000 per year. Prior to running his restaurant, Joe was a lawyer earning $150,000 per year. What would economists say is Joe's cost of running the restaurant?
A. $150,000
B. $200,000
C. $250,000
D. $400,000
Answer: D
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An electrician quits her current job, which pays $40,000 per year. She can take a job with another firm for $45,000 per year or work for herself. The opportunity cost of working for herself is
A) $5,000. B) $40,000. C) $45,000. D) $85,000.
Refer to the above figure. Profits will equal zero
A) when the price equals $1. B) when the price equals $2. C) when the price equals $4. D) at prices between $1 and $2.
John has been a sky diver for many years. When the company John works for offers its employees the option to purchase a life insurance policy, John purchases a policy. This illustrates the problem of
a. moral hazard. b. adverse selection. c. risk-return tradeoff. d. diversification.
Refer to the above figure. Suppose the economy is now at point B. In the long run, the price level will most likely be.
A. 20 B. 40 C. 45 D. higher than 45