Producer surplus measures the value between the actual selling price and the:
A. price at which sellers are willing to sell the product.
B. deadweight loss price.
C. lowest price sellers are willing to sell the product.
D. profit-maximization price.
Answer: A
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In the scenario above, as a result of increased advertising, Talbot's markup
A) decreases by $100. B) increases by $50. C) increases by $75. D) decreases by $60.
PPP is a theory of real exchange rate determination
Indicate whether the statement is true or false
Firms have ________ over their ________ costs in the short run.
A. control; overhead B. control; fixed C. no control; variable D. no control; fixed
The profit-maximizing manager of Big Farms wants to purchase a large piece of farm equipment. The manager has two financing options from two different banks. Big Bank will allow the manager to make five equal payments of $22,000 at the end of each of the next five years. Best Bank will allow the manager to make a payment of $10,000 at the end of the next four years and then make a balloon payment
of $72,000 at the end of the fifth year. If the interest rate is 4 percent, which of the following statements is true? A) The manager of Big Farms should select Big Bank's offer because the total repayment is less than the total repayment at Best Bank. B) The manager of Big Farms should select Big Bank's offer as the present value of the payment plan is $97,939.60, which is lower than the payment plan offered by Best Bank. C) The manager of Big Farms should select Best Bank's offer as the present value of the payment plan is $95,477.75, which is lower than the payment plan offered by Big Bank. D) The present value of the two payment plans is exactly the same, so the manager of Big Farms is indifferent between the two payment plans.