In both the case of the CPA painting her house and the painter filing his taxes, what is the determining factor that causes them to use professional services? What is the benefit of this specialization?
What will be an ideal response?
The opportunity cost of doing the job themselves is the deciding factor of what is the most economical for the CPA and the painter. It would cost $1500 (30 hr ? $50/hr) for the CPA to paint her own house, taking into account what she could have earned spending that time working as a CPA. However it only costs her $600 to hire the painter, even though he paints slower. The situation is similar for the painter, costing him $150 as an opportunity cost of filing his own taxes instead of working, compared to $100 for having the CPA do it. Looking at the outcome of the example, the clear benefit of specialization is a reduction of costs.
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Suppose you have one hour to catch a flight to Miami for spring break, and it takes 45 minutes to drive to the airport. Your car is almost out of gas and the price of gas at the closest gas station is higher than at other gas stations that are much farther away. To you, the price elasticity of demand for gas is likely to be ________ than it would be if you had several hours before the flight.
A. more variable B. higher C. lower D. no different
Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Explain the differences between using the monetary base versus federal funds rate as the monetary policy instrument. Which does the Fed use as its instrument?
What will be an ideal response?
If "too much choice" is a problem for consumers, it would occur in which market structure(s)?
a. perfect competition b. monopoly c. monopolistic competition d. perfect competition and monopolistic competition