What is the difference between zero accounting profit and zero economic profit?
What will be an ideal response?
Economic profits take into account opportunity costs. Accounting profits do not. So, economic profits will typically be smaller than accounting profits. If a firm has zero accounting profits, it will be making an economic loss, while a firm with zero economic profits will have positive accounting profits.
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Suppose that the economy is currently at full employment. All other things being equal, if the government implements restrictive policies then the appropriate monetary policy is
a. no change from the current policy. b. reduce the growth of the money supply. c. constant growth of the money supply. d. increase the growth of the money supply.
The notion that similar taxpayers should pay similar amounts of taxes is known as
a. vertical equity. b. the benefits principle. c. horizontal equity. d. taxpayer efficiency.
Suppose you are a risk-neutral manager attempting to hire a new sales manager. All of the workers in the market have the same ability to manage and sell, but they differ with respect to the wage at which they are willing to work for your company. The market for sales managers is composed of three types of individuals: 85 percent are willing to work for $75,000 and 15 percent are willing to work for $85,000. The first interviewee is only willing to work for $85,000. If the human resource director spends five hours interviewing each candidate and the opportunity cost of this director's time is $500, then the director should:
A. search again since the expected benefit of an additional search exceeds the cost. B. stop searching since the expected benefit of an additional search is less than the cost. C. stop searching since the expected benefit of an additional search exceeds the cost. D. search again since the expected benefit of an additional search is less than the cost.
Homo economicus is all of the following EXCEPT:
A. well-informed. B. narrowly self-interested. C. cognitively naive. D. highly disciplined.