When a business is set up as a partnership, the owners of the business face unlimited liability
Indicate whether the statement is true or false
TRUE
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Refer to Figure 5-11. S1 represents the supply curve that reflects the private cost of production and S2 represents the supply curve that reflects the social cost of production
One way to internalize the external cost generated by utilities is to impose a Pigovian tax on the production of electricity. What is the size of the Pigovian tax that will internalize the cost of the externality? A) P2-P0 B) P1-P0 C) P2-P1 D) P0
Constantine purchased 100 shares of IBM stock several years ago for $150 per share. The price of these shares has fallen to $55 per share. Constantine's investment strategy is "buy low, sell high"
Therefore, he will not sell his IBM stock until the price rises above $150 per share. If he sells at a price lower than $150 per share he will have "bought high and sold low." Constantine's decision: A) is correct and shows a solid command of the nature of opportunity cost. B) is incorrect because the original price paid for the shares is a sunk cost and should have no bearing on whether the shares should be held or sold. C) is incorrect because when the price of a stock falls, the law of demand states that he should buy more shares. D) is incorrect because it treats the price of the shares as an explicit cost.
In the short run, an increase in the quantity of money normally
a. has no effect; in the long run, V will increase. b. has no effect; in the long run, V will decrease. c. results in an increase in velocity. d. results in a decrease in velocity.
At the end of the year, Ford realizes it has overproduced Fiestas, because 2,500 of them are left unsold. How is this accounted for in that year's GDP? The cars are:
A. considered durable goods, and their value will increase consumption. B. considered inventory and their value will increase investment. C. not counted until they are sold in next year's GDP. D. considered a bad thing and reduce the value of investment.