Rick buys a 1966 Mustang for $3,000 . planning to restore and sell the car. He goes on to spend $9,000 restoring the car. At this point he can sell the car for $10,000 . As an alternative, he can spend an additional $3,000 replacing the engine. With a new engine the car would sell for $13,000 . Rick should
a. complete the repairs and sell the car for $13,000.
b. sell the car now for $10,000.
c. never try such an expensive project again.
d. be indifferent between (i) selling the car now and (ii) replacing the engine and then selling it.
d
You might also like to view...
Which of the following is a problem with using real GDP as a measure of economic well-being? a. It fails to measure the value of leisure
b. It fails to measure the underground economy. c. It does not factor in externalities. d. all of the above
The government intervenes in the economy to protect labor by
A. Ensuring minimum wages in addition to overtime provisions. B. Ensuring workplace safety conditions. C. Enforcing child labor laws to prevent child exploitation. D. All of the choices are correct.
In goods market equilibrium in an open economy,
A. the desired amount of national saving must equal the desired amount of domestic investment plus the amount lent abroad. B. the desired amount of exports must equal the desired amount of imports. C. the desired amount of exports must equal the desired amount of imports less the amount lent abroad. D. the desired amount of national saving must equal the desired amount of domestic investment.
Answer the following statements true (T) or false (F)
1) If households and firms in an economy would save all extra income that they receive so that MPC = 0, then the multiplier in that economy is zero. 2) The steeper is the consumption schedule in an economy, the larger will be the multiplier. 3) Positive net exports increase aggregate expenditures beyond what they would be in a closed economy and thus have an expansionary effect on domestic GDP. 4) An increase in imports, other things constant, would tend to raise the equilibrium level of GDP.