The monthly mortgage payments made by a homeowner are
A) always sunk costs because the costs of constructing the house lie entirely in the past.
B) marginal costs if the house is new but sunk costs if it was purchased from a previous owner.
C) marginal costs of continuing to own and occupy the house.
D) not marginal costs because the house will continue to exist whether or not the payments are made.
E) sunk costs only if all the bills for earlier construction work have been fully paid.
C
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Asymmetric information contributes to
A) the adverse selection problem. B) the moral hazard problem. C) both the adverse selection problem and the moral hazard problem. D) neither the adverse selection problem nor the moral hazard problem.
GDP will grow faster than real GDP if
A. deflation occurs in an economy.
B. imports exceed exports in an economy.
C. inflation occurs in an economy.
D. unemployment occurs in an economy.
In general, economists assume that firms
A. maximize economic profit. B. maximize sales. C. maximize revenue. D. maximize accounting profit.
If product prices decrease more than nominal wages decrease, then the real value of wages will increase.
Answer the following statement true (T) or false (F)