Prospect theory implies that consumers are motivated by
a. The actual price level
b. The distance of the price from the reference price
c. All of the above
d. None of the above
b
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Two university graduates, Bill and Steve, worked for an advertising agency at an annual salary of $40,000 each for 3 years after they graduated. Then, they decided to quit their jobs and start a partnership that designs and builds Web sites
They rented an office for $12,000 a year and bought capital for $30,000. To pay for the equipment, Bill and Steve borrowed money from a bank at an annual interest rate of 6 percent. During their first year of operation, the partners' total revenue was $100,000. The market value of their capital at the end of the year was $20,000. If Bill and Steve do not design Web pages, their best alternatives are to return to their previous job. a) What is the firm's economic depreciation? b) What are the partnership's costs? c) What is the firm's economic profit in the first year of operation?
There are circumstances under which the corporation tax is equivalent to an economic profits tax.
A. True B. False C. Uncertain
If (T? G) = (X? IM), then (S? I)
A. is greater than zero. B. is zero. C. is less than zero. D. cannot be calculated.
Which of the following statements is FALSE?
A. A reduction in the required reserve ratio increases the money supply and pushes down the equilibrium interest rate. B. Both monetary and interest rate targets cannot be pursued simultaneously. C. An open market sale decreases the money supply and pushes up the equilibrium interest rate. D. An open market purchase reduces the money supply and pushes down the equilibrium interest rate.