The accounting profits for a firm are 20% of output, and the opportunity cost of financial capital is 8% of output. Given this information, what are the firm’s economic profits?
a. 6% of output
b. 10% of output
c. 12% of output
d. 8% of output
c. 12% of output
The firm’s economic profits are 12% of output.
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Fiscal policy is typically
A. difficult to implement quickly. B. extremely flexible, because most government spending is discretionary. C. hard to implement despite the fact that there are not usually implementation problems. D. extremely flexible provided policy lags are short.
For "an increase in the quantity demanded" but not "an increase in demand" to occur, there must be a
A) rightward shift of the demand curve. B) movement along the demand curve. C) rightward shift of the demand curve and a movement along the demand curve. D) Both answers B and C are correct.
Imagine an economy in which: (1) pieces of paper called yollars are the only thing that buyers give to sellers when they buy goods and services, so it would be common to use, say, 50 yollars to buy a pair of shoes; (2) prices are posted in terms of yardsticks, so you might walk into a grocery store and see that, today, an apple is worth 2 yardsticks; and (3) yardsticks disintegrate overnight, so
no yardstick has any value for more than 24 hours. In this economy, a. the yardstick is a medium of exchange but it cannot serve as a unit of account. b. the yardstick is a unit of account but it cannot serve as a store of value. c. the yardstick is a medium of exchange but it cannot serve as a store of value, and the yollar is a unit of account. d. the yollar is a unit of account, but it is not a medium of exchange and it is not a liquid asset.
Two people are involved in a borrower/lender situation, and one person has superior knowledge of its own current and future prospects over the other person. This is known as
A. deceptive knowledge. B. symmetric information. C. preventable information. D. asymmetric information.