Use the following graph for a perfectly competitive firm generating a loss in the short run to answer the next question.
Which area in the graph represents the loss generated by the firm?
A. bcde
B. 0beg
C. abef
D. acdf
Answer: A
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The government of Bassaland is looking for new revenue sources. It is considering imposing an excise tax on two goods: palm wine and diapers
If the price elasticity of demand for the goods are -0.47 and -1.89 respectively, which good should it tax if the goal is to raise revenue? If the government wants to tax only one good, which good should it tax if the goal is to discourage consumption? Explain your answer.
Anything can be money if it acts as a:
a. unit of account. b. store of value. c. medium of exchange. d. All of these must be correct.
If the government imposes price controls and prevents prices from adjusting naturally to supply and demand, a. it equates the amount buyers are willing and able to buy with the amount sellers are willing and able to supply. b. it adversely affects the allocation of resources
c. it improves both equality and efficiency. d. it improves efficiency.
A radio manufacturer is experiencing theft problems at its warehouse and has decided to hire security guards to reduce the thefts. The firm wants to minimize the net cost of warehouse thefts. 
Given the above info, if each security guard is paid $200 a week and the cost of a stolen radio is $25, how many security guards should the firm hire?
A. 1 B. 2 C. 3 D. 4 E. 5