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 experiences an economic loss of $6000.
B. Tom has an opportunity cost of $41,000.
C. Tom earns an accounting profit of $35,000.
D. All of these are true.
Answer: D
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In the short run, which of the following is FALSE about the shutdown point?
A) Total revenue is equal to total fixed cost. B) Total revenue is equal to total variable cost. C) Product price is equal to the minimum average variable cost. D) Price multiplied by quantity must be equal to minimum average variable cost multiplied by quantity.
The central difference between the standard theory and the structural stagnation hypothesis, when it comes to growth, is:
A. the federal funds rate. B. the trend growth rate. C. the level of inflation. D. the natural rate of unemployment.
Every time we use scarce resources in one way, we give up the opportunity to use them in other ways.
Answer the following statement true (T) or false (F)
There is a government budget surplus if
A) T - TR > G. B) G > T. C) G > TR. D) TR < T.