Suppose Bob leaves his $50,000-a-year job as a financial advisor to P.E.T.S. and starts his own business selling spot remover for Dalmatians. In the first year his accounting profit is $70,000 . Based on this level of success, Bob should
a. return to his old job because his economic profit is negative
b. return to his old job because his economic profit is smaller than his accounting profit
c. return to his old job because his economic profit is less than his old salary
d. stay with his new firm because his economic profit is positive
e. stay with his new firm because accounting profit is positive
D
You might also like to view...
Economic sanctions
A) usually work to create policy change in the targeted country. B) are more likely to work if the international community supports them. C) are more likely to work if military force is not used. D) never work to create policy change in the targeted country. E) Both A and C.
Expansionary monetary policy should be used if:
A) aggregate demand-aggregate supply equilibrium is below potential output. B) aggregate demand-aggregate supply equilibrium is above potential output. C) aggregate demand-aggregate supply equilibrium is equal to potential output. D) none of the above.
The MU/P equalization principle means consumers will spend their income (budget) so that the MU/P ratio of the goods consumed is
a. zero for each good b. higher for goods the consumer wants the most (highest marginal utility) c. maximized for the goods the consumer wants the most (highest marginal utility) d. higher than TU/P e. the same for each good
Why is persistent unemployment a possibility in the Keynesian model but NOT in the classical model?
A. The Keynesian model assumes that nominal wages are inflexible downward. B. The Keynesian model assumes that people work for motives other than those of earning an income for themselves and supporting a family. C. The Keynesian model assumes that workers can lose their jobs to foreign competition during economic downturns. D. The Keynesian model assumes that the level of real GDP is inflexible.