DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will also detail the car's engine, a
service that adds an additional $20 to the total cost of the package. Should DeShawn continue to offer the engine detailing service?
A) Yes, he still makes a profit by selling the engine detailing service with the basic detailing package.
B) yes, but only if he raises the price of the basic detailing package
C) No, his marginal benefit is less than his marginal cost.
D) More information is needed for DeShawn to make this decision.
Answer: C
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The above figure shows the market for steel ingots. If the market is competitive, and the government institutes a $100 specific tax on steel, then
A) less than the socially optimal quantity of steel is produced. B) the socially optimal quantity of steel of 50 units is produced. C) the socially optimal quantity of steel of 100 units is produced. D) more than the socially optimal quantity of steel is produced.
If a firm is earning negative economic profits, it implies
a. That the firm's accounting profits are necessarily zero b. That the firm's accounting profits are necessarily positive c. That the firm's accounting profits are necessarily negative d. Economic profits alone cannot determine accounting profits
In a simple economy (no government sector), the equilibrium level of GDP will be less than the full employment level of income if, at the full employment level of income, the
a. saving that consumers want to do is less than investing that businesses want to do. b. saving that consumers want to do is greater than investing that businesses want to do. c. saving that consumers want to do is less than spending that consumers want to do. d. inventories are being depleted.
Fiscal policy is the use of taxes and spending by the government to affect aggregate demand.
Answer the following statement true (T) or false (F)