A firm should always shut down if it is earning negative profits.
a. true
b. false
Answer: b. false
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Real income measures the
A) slope of the budget line. B) purchasing power of a given income. C) slope of the preference map. D) area under the indifference curve.
The figure above shows the market for milk. The ________ price that producers must be offered to get them to produce 250 gallons of milk per day is ________
A) maximum; $3.25 B) minimum; $3.25 C) maximum; $2.50 D) minimum; $2.50
Transaction and information costs
A) benefit borrowers at the expense of savers. B) benefit savers at the expense of borrowers. C) transaction costs hurt savers while information costs hurt borrowers. D) create profit opportunities for those who can reduce these costs.
If Sam's opportunity cost of a sweater is $37, which of the following prices would he have to observe in the market in order to sell a sweater?
A. $37 B. $37.01 C. $50 D. Sam would sell a sweater at any of these prices.