Widespread behavioral evidence suggests that people:
A. are unable to assess the relative value of gains and losses.
B. weigh gains more heavily than losses.
C. place equal weight on gains and losses.
D. weigh losses more heavily than gains.
Answer: D
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For a business, opportunity cost measures
A) only the cost of labor and materials. B) only the implicit costs of the business. C) the cost of all the factors of production the firm employs. D) only the explicit costs the firm must pay. E) all of the firm's costs including its normal profit and its economic profit.
Which of the following represents a price elastic supply?
A) The quantity demanded increases 18 percent as a result of a decrease in the price of 8 percent. B) The price rises by 8 percent causing the quantity demanded to fall by 10 percent. C) The quantity supplied increases by 21 percent as a result of an increase in the price of 12 percent. D) The price rises by 22 percent causing the quantity supplied to increase by 3 percent.
If a short-run fixed cost is sunk, then
A) losses can be minimized by shutting down. B) the firm should keep producing to cover the sunk cost. C) the cost cannot be avoided by shutting down. D) Both B and C.
If a firm is operating at the point of tangency between an isoquant and an isocost line, its production is:
A. both technically and economically inefficient. B. technically efficient but economically inefficient. C. both technically and economically efficient. D. technically inefficient but economically efficient.