Damian shares a small food truck with his sister. His share of the expenses is $500 per month. He has decided to get his own, newer food truck which he will not have to share with anyone. His expenses for the newer truck are $1,400 per month. Damian is
as rational as any other person. As an economics major, you rightly conclude that
A) Damian cannot afford the newer truck and will have to go back to sharing a truck with his sister.
B) Damian figures that the additional benefit of having his own truck (as opposed to sharing) is at least $900.
C) Damian figures that the additional benefit of having his own truck (as opposed to sharing) is at least $1,400.
D) the cost of having one's own truck outweighs the benefits.
Answer: B
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A. what price to charge. B. whether to advertise. C. whether to maximize its profits. D. how much to produce.
Household wealth refers to
a. human capital. b. the flow assets. c. net worth. d. the flow of income.
Under perfect competition, the demand curve facing a firm and the firm's marginal revenue curve are
a. vertical at the firm's chosen output level b. both vertical, but the demand curve is further to the right than the marginal revenue curve c. both vertical, but the marginal revenue curve is further to the right than the demand curve d. both horizontal at the level of the market price e. both horizontal, but the demand curve is above the marginal revenue curve
If the demand function for apples is P = 1 - Q, how much consumer surplus does the consumer gain when the price of the apples equals 5?
A. 25 B. 5 C. 12.5 D. 20