Refer to Scenario 9.5 below to answer the question(s) that follow. SCENARIO 9.5: Investors put up $520,000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 percent on their investment. The restaurant is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $1,000 per week in other fixed costs. Variable costs include $1,000 in weekly wages and $600 per week for materials, electricity, etc. The restaurant charges $3 on average per meal. Refer to Scenario 9.5. In the short run, if the restaurant shuts down, its losses will equal its ________ costs of ________.
A. variable; $1,600
B. fixed; $2,000
C. total; $3,600
D. fixed; $1,000
Answer: B
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The longer is the interval between firms' price adjustments
A) the smaller the output effect of a given change in the money supply. B) the longer the interval that the horizontal new Keynesian aggregate supply curve will remain in position. C) the new Keynesian aggregate supply curve will become steeper. D) the shorter the interval the horizontal new Keynesian aggregate supply curve will remain in position.
When you chose to buy the second cup of coffee instead of the third bagel, which of the following is necessarily CORRECT?
A) The second coffee will give you higher marginal utility. B) The second coffee is cheaper than the third bagel. C) The marginal utility per dollar from the third bagel is less than the marginal utility per dollar from the second coffee. D) Both answers A and C are correct.
A notable and unique feature of the colonial monetary system was
a. the use of minted silver coins. b. the circulation of commodities as money. c. the use of a widely accepted paper currency. d. the development of checking accounts issued by private commercial banks.
When the supply of credit is fixed, an increase in the price level stimulates the demand for credit, which in turn reduces consumption and investment spending. This argument is called the:
a. real balances effect. b. interest-rate effect. c. net exports effect. d. substitution effect.