Can sales agents, such as realtors, generate economic surplus?
A. Yes, because they help ensure that goods are purchased by consumers who value them the most highly.
B. No, because the value of a product is based purely on the cost of producing it and not on who buys it.
C. Yes, but only if they work for free, otherwise they are a waste of resources.
D. No, because sales agents don't produce anything new.
Answer: A
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The Public Service Company of Colorado is a natural monopoly in the transmission and distribution of electric power. As such, it will incur an economic loss if it
A) goes out of business. B) prices its services at average total cost. C) prices its services at marginal cost. D) all of the above
In the long run, the economic profits of Hoot's Chicken 'n' Ribs, a monopolistic competitor, are:
a. not eliminated, because competition is not perfect. b. not eliminated, because the demand curve slopes downward. c. eliminated due to firms entering the industry. d. eliminated due to firms leaving the industry. e. not eliminated, because firms cannot enter the industry.
Suppose that you open your own business and earn an accounting profit of $35,000 per year. When you started your business, you left a job that paid you a $30,000 salary annually. Also, suppose that you invested $70,000 of your own funds to start up your business. If the normal rate of return on capital is 10 percent, your economic profit is
A. -$2,000. B. -$5,000. C. $5,000. D. $2,000.
Which of the following is considered to be an "environmental explanation" for discrimination?
a. personal tastes and preferences for discrimination b. affirmative action programs c. less training and education d. religious beliefs