Use the following information to answer the next question. Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10% interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 each. Of the $75, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. What is the accounting profit generated by Extreme Gaming in the first year?
A. $5,000
B. $160,000
C. $780,000
D. $220,000
Answer: D
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When cyclical unemployment increases and other things remain the same, ________
A) the natural unemployment rate increases B) the amount of frictional unemployment increases C) the amount of structural unemployment decreases D) the natural unemployment rate does not change
Social Security taxes are
A) progressive because all workers pay the tax. B) regressive because higher income workers pay taxes on a smaller percentage of their income. C) proportional because everyone is charged the same percentage tax rate. D) regressive because higher income workers don't pay the tax.
For market prices that are below the shut-down point of every firm in the market, the short-run market supply curve
a. slopes upward b. slope downward c. follows the horizontal axis d. rises at a 45-degree angle e. follows the vertical axis
In the long run, supply curves tend to be relatively elastic. This is because
a. demand is also elastic in the long run b. in the short run, fixed costs are fixed c. in the long run, suppliers can adjust the quantities of all resources used in production d. in the long run, suppliers can eliminate inefficient resources e. in the long run, suppliers will enter and exit other industries