In applying the lower of cost or market rule, the floor is defined as:
a) current replacement cost
b) historical cost
c) net realizable value
d) net realizable value less a normal profit margin
Answer: d) net realizable value less a normal profit margin
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An argument in favor of 100 percent reserve banking is that
A) a bank deposit is owned by the depositor, so the bank has no legal right to lend the deposit to someone else. B) banks should be allowed to lend deposits in order to increase their profits and strengthen the banking system. C) unregulated institutions would be riskier than regulated fractional-reserve banks. D) it would limit the precision of the central bank's control over the quantity of money.
Bob's Lawn Care Services is a perfectly competitive firm that currently mows 22 lawns a week. Bob's marginal cost exceeds the price he charges. Bob can increase his profit if he
A) charges a higher price. B) charges a lower price. C) mows fewer than 22 lawns a week. D) mows more than 22 lawns a week.
Government spending on a transfer payment is illustrated by
a. interstate highways b. elementary and high school education c. community colleges d. land-grant universities e. agricultural subsidies
The demand for microwaves in a certain country is given by: D = 8,000 - 30P, where P is the price of a microwave. Supply by domestic microwave producers is: S = 4,000 + 10P. If this economy opens to trade while the world price of a microwave is $50, the domestic quantity demanded will be ________ and quantity supplied will be ________.
A. 6,000; 4,000 B. 6,500; 3,000 C. 5,000; 5,000 D. 6,500; 4,500