A firm has $200 million in total revenue and explicit costs of $190 million. Suppose its owners have invested $100 million in the company at an opportunity cost of 10 percent interest rate per year. The firm's economic profit is:
A. $400 million.
B. $100 million.
C. $80 million.
D. zero.
Answer: D
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Suppose the government taxes a company that produces plastic water bottles and at the same time consumers become hesitant to use plastic water bottles due to the fear of toxins in the plastic. What would happen in the market to the equilibrium price and quantity of plastic water bottles?
A. Price increases and quantity is indeterminate. B. Quantity decreases and price is indeterminate. C. Quantity increases and price is indeterminate. D. Price decreases and quantity is indeterminate.
The simple spending multiplier understates the amount by which output changes
a. True b. False Indicate whether the statement is true or false
Loans made between lenders and borrowers are:
A. liabilities of the borrowers. B. not taxable in the state of origination. C. liabilities of the lenders. D. assets to the borrowers.
If the price level was lower than the equilibrium price level, then aggregate quantity supplied is __________ aggregate quantity demand.
Fill in the blank(s) with the appropriate word(s).