Explain why sunk costs are irrelevant to choosing the best amount of an activity.
What will be an ideal response?
The best amount of an activity occurs where MC = MB. Because sunk costs are not related the level of the activity, they have no impact on MC. Since MC doesn't change in the face of a sunk cost, the best choice will not change.
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All else being equal, if Asian restaurants switch from serving French champagne to serving California wines, then the market equilibrium value of the exchange rate for the U.S. dollar will:
A. either rise or fall depending on whether the supply or demand for dollars changes more. B. become fixed. C. rise. D. fall.
What is the shape of the total revenue curve derived from a linear downward sloping demand curve?
A) Horizontal B) Vertical C) U-shaped D) Inverted u-shaped
The national manifest system,
a. tracks only the most toxic hazardous wastes b. tracks hazardous and nonhazardous wastes from the point of generation to disposal c. was eliminated with the 1984 RCRA amendments d. is a market-based approach aimed at achieving an efficient solution e. none of the above
If a hurricane were to wipe out the majority of the eastern seaboard in the United States:
A. neither the short-run nor long-run aggregate supply curves would be affected. B. only the long-run aggregate supply curve would shift left. C. only the short-run aggregate supply curve would shift left. D. the long-run and short-run aggregate supply curves would both shift left.