Which of the following factors causes the barter system to be inefficient?
A. Its cost of transaction is too low.
B. It requires high liquidity.
C. It requires a double coincidence of wants.
D. The cost associated with information search is too low.
Answer: C
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Two firms, Industrio and Capitalista, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Both firms currently use process A, and each emits 4 tons of smoke per day. The government is considering two plans to reduce pollution: requiring both firms to reduce pollution by 25 percent or auctioning pollution permits. Each permit would entitle the owner to emit one ton of smoke per day. Without a permit, no smoke can be emitted. Process(smoke/day) A(4 tons/day) B(3 tons/day) C(2 tons/day) D(1 ton/day) E(0 tons/day) Cost to Industrio ($/day) $350$400$500$700$1,000 Cost to Capitalista
($/day) $225$250$290$400 $600Suppose the government decides to sell 6 permits allowing a total of 6 tons of pollution. The government starts the bidding with an opening price of $30. What happens next? A. A total of five permits will be demanded, forcing the government to lower the price. B. A total of seven permits will be demanded, forcing the government to raise the price. C. Industrio will demand 3 permits and Capitalista will demand 3 permits. D. Industrio will purchase all available permits at $30.
If the quantity supplied of money is less than the quantity demanded of money, people will ________ bonds which will cause bond prices to ________ and the nominal interest rate to ________ until the quantity demanded and quantity supplied of money are equal.
A. sell; rise; fall B. buy; fall; rise C. sell; fall; rise D. sell; fall; fall
Products produced domestically and sold in foreign countries are called ________, and products produced in foreign countries and sold domestically are called ________
Fill in the blank(s) with correct word
Professor Rush decided to quit teaching economics and opens a shoe store out at the mall. He gave up an annual income of $50,000 to open the store. A year after opening the shoe store, the total revenue for the year was $200,000
Rush's expenses were $30,000 for labor, rent was $18,000, and utilities were $1,200. He also had to purchase new shoes from manufacturers, at a cost of $60,000, which was financed by cashing in his savings of $60,000 that had been in a bank earning 8 percent per year. The normal profit from operating a shoe store in the mall is $20,000. Determine Professor Rush's explicit costs, implicit costs, and economic profit.