Why would the owners of a factory benefit from knowing the economic profit of their business?
a. It offers the greatest level of detail on how much money their firm makes.
b. It will enable them to identify their firm’s most profitable departments.
c. It will give insight into whether their time and money are well invested.
d. It is essential for determining their firm’s taxable income.
c. It will give insight into whether their time and money are well invested.
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If the marginal social cost of a good equals the marginal private cost of the good, then the marginal external cost of the good
A) is zero. B) equals the marginal social cost. C) equals the marginal social benefit. D) equals the marginal private benefit.
Use the following table for a hypothetical single-product economy. year units of output price per unit price index (1=100) 1 10 10 100 2 12 20 200 3 15 30 300 4 20 40 400 Refer to the above data. Nominal GDP in year 4 is:
a) $320. b) $450. c) $225. d) $800.
The major economic effect of Medicare subsidies is
A. that the number of physicians has decreased since compensation is low. B. to lower the price of medical services and reduce the quantity demanded. C. to increase the price of medical services and increase the quantity demanded. D. to increase the price of medical services and reduce the quantity demanded.
Which of the following illustrates the principle of second best?
A. The government decides to impose taxes on all automobiles rather than imposing a tax only on luxury automobiles. B. The government imposes a tax on a meat processing plant that equals the cost of cleaning the lake damaged by the waste discharged into the lake by the meat processor. C. A tax imposed on land, because this tax distorts economic decisions less than taxes on other factors of production. D. The government imposes taxes on cigarettes and the tax revenue collected is used to pay for health care.