Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000 . The annual explicit costs of the materials used to make the cookie jars are $54,000 . Christine used $5,000 from her personal savings account to buy pottery tools for her business. The savings account paid 1% annual interest. What is Christine's annual opportunity cost of the
financial capital that she invested in her business?
a. $5
b. $50
c. $100
d. $200
b
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The free-rider problem can arise when consumption of a good is
A) rival. B) excludable. C) nonrival but excludable. D) nonexcludable.
Disposable income represents ________
A) the income received by firms, e.g. corporations B) an increase in GDP C) a decrease in GDP D) the after-tax income received by the household
When society requires that firms reduce pollution, there is
a. a tradeoff because of reduced incomes to the firms' owners and workers. b. a tradeoff only if some firms are forced to close. c. no tradeoff, since the cost of reducing pollution falls only on the firms affected by the requirements. d. no tradeoff, since everyone benefits from reduced pollution.
If a firm is producing an output rate at which marginal cost is equal price, the firm
A. will not be covering its fixed cost. B. is maximizing profits. C. should increase its output level. D. should reduce its output level.