Imagine Tom's annual salary as an assistant store manager is $30,000, he owns a building that rents for $10,000 yearly, and his financial assets generate $1,000 per year in interest. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his financial assets to establish a bicycle repair shop. To run the business, he outlays $15,000 in cash to cover all the costs involved with running the business, and earns revenues of $50,000. Which of the following statements is true?
A. Tom has an opportunity cost of $41,000.
B. Tom earns an accounting profit of $35,000.
C. Tom experiences an economic loss of $6000.
D. All of these are true.
D. All of these are true.
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Marginal product crosses the horizontal axis (is equal to zero) at the point where
A) average product is maximized. B) total product is maximized. C) diminishing returns set in. D) output per worker reaches a maximum. E) All of the above are true.
The market structure called monopolistic competition is named using both monopoly and perfect competition. Why?
a. There are few firms in the market all producing identical products. b. There is just one firm whose product can be easily differentiated. c. There are a huge number of firms selling identical products at the same price. d. There are many firms with easy entry and exit but each firm sells a unique product. e. Firms spend very little on advertising and promotion and thus are price takers.
Suppose that British tastes changed and American goods become more desirable to British citizens. There would be
a. a leftward shift of the supply of pounds curve. b. a movement downward along the supply of pounds curve. c. a movement upward along the supply of pounds curve. d. a rightward shift in the supply of pounds curve. e. a rightward shift in the demand curve for pounds..
Figure 10.5 Federal Outlays, Receipts, and Surplus/Deficit, as a Percent of GDP, 1980-2011
What will be an ideal response?