Mary Jane is willing to babysit for $6 an hour. Her neighbor has asked her to babysit for $8 an hour. Assuming Mary Jane accepts the offer:
A. her accounting profit will be $8 per hour, and her economic profit will be $0 per hour.
B. her economic rent will be $2 per hour.
C. her consumer surplus will be $2 per hour.
D. her economic profit will be $8 per hour.
Answer: B
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Retained earnings are
A) the funds held back to pay out dividends. B) the funds used to pay corporate taxes. C) profits not given out to stockholders. D) the reason there is double taxation.
In reality, decisions made by firms may not always produce maximum total profit because some executives
a. are more motivated by altruism. b. are more interested in market share than profits. c. may push research and development to the point that profits decline. d. All of the above are correct.
In long-run equilibrium under perfect competition,
a. the firm and the industry will have the same cost curves. b. only a very few firms will be earning economic profits. c. the demand curves facing individual firms will fall to the level of minimum AC. d. individual firms will tend to increase their outputs.
If the demand elasticity for corn is -0.5, then a 5% increase in the quantity demanded to the market will result in a price change of
A. +5% B. +10% C. -5% D. -10%