Richard Bland quit his job as an accounting professor to start his own restaurant. He gave up a salary of $50,000 per year and withdrew $100,000 in bank CDs earning 5 percent to buy a building and equipment. In the restaurant's first year it had direct expenses of $75,000 and revenues of $150,000 . The restaurant's economic profit was
a. $15,000.
b. $20,000.
c. $75,000.
d. not possible to determine from the information given.
b
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The absence of clear property rights
A) is common in many developing nations. B) encourages creative destruction. C) is caused by capital deepening. D) all of the above.
If the marginal propensity to consume is 0.85 and there are no imports or income taxes, the expenditure multiplier is equal to
A) 1 ÷ (1 - 0.85 ) = 1 ÷ 0.15 = 1.45. B) 0.85 × the change in autonomous expenditure. C) 0.85 ÷ 1 = 0.85. D) 1 ÷ 0.85 = 1.176. E) 1 - 0.85 = 0.15.
Refer to Table 2-18. Which of the following statements is true?
A) Mickey has a comparative advantage in making both products. B) Minnie has a comparative advantage in making both products. C) Minnie has a comparative advantage in making hats and Mickey in making umbrellas. D) Mickey has a comparative advantage in making hats and Minnie in making umbrellas.
Which of the following statements about cartels is false?
A. Cartels are illegal in the United States. B. If a cartel is to be successful, it must secure the full support of all its members. C. Cartels are reluctant to raise or lower their prices. D. A cartel is a group of firms colluding to control output and maximize group profits.