Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfare is $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1,400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfare is $450. If the Chicago-Atlanta round-trip air fare were $350, should you use the coupon to go to Miami?
A. No, your economic surplus would be -$100.
B. Yes, your economic surplus would be $50.
C. Yes, your economic surplus would be $400.
D. No, your economic surplus would be -$50.
Answer: B
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According to the Gordon-Growth model, an increase in the required return on equity
A) increases the future value of the stock. B) reduces the current dividend. C) reduces the value of a stock. D) reduces the expected growth rate of the dividend.
Forecasts are
A) generally incorrect. B) predictions about the future. C) explanations of past occurrences. D) limited to short time periods.
A firm in a perfectly competitive market can increase total revenue by raising the price of its product
a. True b. False
Table 24.1Monopoly Costs and RevenueQuantityPriceTotal Cost1$500$4002$450$6503$400$9504$350$1,3005$300$1,700In Table 24.1, according to the profit maximization rule, at the profit-maximizing level of output, the average total cost is
A. $316.67. B. $340. C. $325. D. $400.