What is the difference between accounting cost and economic cost?
What will be an ideal response?
Accounting cost measures only the out-of-pocket costs of production. Economic cost includes both out-of-pocket costs and the full opportunity costs of all the factors of production. Economic cost includes a normal rate of return on capital.
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If the market in the figure above is a profit-maximizing single-price monopoly, the producer surplus is the area ________
A) ABH B) BFGH C) ACG D) BDEH E) ACE
If the nominal interest rate is 3% and the inflation rate is 6%, the real interest rate is
a. 2% b. 3% c. -3% d. 9%
In the aggregate demand-aggregate supply model, an increase in the price level will
a. increase money demand, raise the interest rate, reduce aggregate expenditure, and decrease equilibrium real GDP b. decrease money demand, lower the interest rate, increase aggregate expenditure, and increase real GDP c. increase the money supply, lower the interest rate, increase aggregate expenditure, and increase real GDP d. decrease the money supply, raise the interest rate, reduce aggregate expenditure, and decrease real GDP e. not change money supply, money demand or the interest rate, but will shift the aggregate demand curve to the right
When the economy enters a prosperity phase, personal income tax collections
a. fall along with consumption and real GDP b. rise along with real GDP but unemployment insurance payments to workers fall c. rise but real GDP and unemployment insurance payments to workers fall d. fall along with real GDP but unemployment insurance payments to workers rise e. fall causing real incomes and employment to fall