Refer to Scenario 15.4. The present value of the electricity bill savings you will receive over the next 10 years is
A) $200 times 10.
B) $200/1.06.
C) $200/1.0610.
D) $200 (1 + 1/1.06 + 1/1.062 + ... + 1/1.069 ).
E) $200 / (1 + 1/1.06 + 1/1.062 + ... + 1/1.069 ).
D
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In the 19th century John Deere took out a patent on a newly designed plow that incorporated steel to make plowing faster. Many farmers bought plows from his company and he made millions. This example shows that patents turn an idea into a
a. public good. b. societal good. c. private good. d. normal good.
If the domestic producers of a good benefit from free trade, it suggests that the country:
A. is a net importer of that good. B. does not have a comparative advantage in that good. C. does not have an absolute advantage in that good. D. is a net exporter of that good.
Which of the following does not contribute to the failure of the law of one price?
A. Technical specifications B. Transportation costs C. Tariffs D. Tastes are similar across countries
The owner of Tie-Dyed T-shirts, a perfectly competitive firm, has hired you to give him some economic advice. He has told you that the market price for his shirts is $20 and that he is currently producing 200 shirts at an AVC of $15 and an ATC of $25. What would you recommend to him?
A. To shut down in the short run, as he is incurring a loss, and to leave the industry in the long run, if there are no changes in economic conditions. B. To continue producing in the short run, as his loss from production is less than his fixed costs, but to exit the industry in the long run if there are no changes in economic conditions. C. To continue to produce in the short run, even though he is earning a loss, and to expand in the future with the hope of increasing market share and total revenue. D. You tell him you cannot make any recommendations until you know what his fixed costs are.