Table 22.1Assume an apple farmer incurs the following costs and revenuesFertilizer$200Seeds$75Water$250Wages$750Property taxes$600Interest payments on borrowed funds$1,200Sales of apples$4,000Suppose the entrepreneur could earn $1,000 as an employee elsewhere. This means the accounting profit is
A. -$1,000.
B. $1,525.
C. -$75.
D. $925.
Answer: D
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When considering the velocity of money, the Federal Reserve is most concerned about its
A) stability. B) absolute size. C) determinants. D) sign.
A risk premium compensates people who invest in risky ventures that succeed.
Answer the following statement true (T) or false (F)
After the price of Revlon nail polish increased, Jen stopped buying Revlon nail polish and started buying a cheaper brand of nail polish instead. This is called:
A. a decrease in the seller's reservation price. B. a decrease in the buyer's reservation price. C. the substitution effect of a price change. D. the income effect of a price change.
Which of the following is not an advantage to an insurance company of insuring a large group of people for health insurance?
A) When all group members pay the premium, the problem of adverse selection is reduced.
B) The characteristics of a large group are likely to reflect those of the entire population.
C) When all group members pay the premium, the problem of moral hazard is reduced.
D) It is easier to accurately predict the number of claims for a group than for an individual.