Joe is self-employed in a store that has a rental value of $500 a month which he pays, but he can vacate the building without giving notice. His other expenses are $100 a month for maintenance. He makes $25,000 a year on net sales (total revenue minus the wholesale cost of the product). If he quit his job and worked the same number of hours elsewhere at a job he liked equally well, he estimates that he could make $20,000 a year. No one else can be hired to work in the store. Suppose that Joe had a long term lease which requires him to pay the rent even if he doesn't operate the store. What should Joe do?
A. Keep the job permanently.
B. Keep the job until the lease expires.
C. Quit immediately.
D. It is impossible to say with the information given in the problem.
Answer: B
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A. a tariff. B. immigration restrictions. C. international waters use policies. D. import quota.
Direct controls are generally much more costly than emissions taxes because
a. under direct controls emissions cutbacks are usually not apportioned among the firms on the basis of their ability to reduce pollution cheaply and efficiently. b. emissions tax per unit of output is higher than the per-unit direct control program cost. c. government cannot legally levy emissions taxes that are as high. d. firms disregard emissions taxes.
The entry of new firms into a competitive industry will very likel
a. shift the short run industry supply curve to the right b. cause the market price to fall c. reduce the profits of firms in the industry d. cause the market quantity sold to rise e. all of the above
The price of wheat used to make cereal has increased. At the same time, the price of milk (a compliment good) has decreased. Given these two events, what do you expect to happen to the equilibrium price and quantity of cereal?
What will be an ideal response?