Refer to Scenario 9.2 below to answer the question(s) that follow. SCENARIO 9.2: Tom borrowed $40,000 from his parents to open a donut stand. He agrees to pay his parents a 5% yearly return on the money they lent him. His other yearly fixed costs equal $10,000. His variable costs equal $25,000. He sold 40,000 dozen donuts during the year at a price of $2.00 per dozen.Refer to Scenario 9.2. Tom's total fixed costs equal
A. $1,000.
B. $10,000.
C. $12,000.
D. $21,000.
Answer: C
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In the figure above, suppose that Mac and Izzie trade and reach point c. Then
A) Mac produces outside his production possibilities frontier. B) Izzie produces outside her production possibilities frontier. C) Mac and Izzie both produce outside their production possibilities frontiers. D) neither Mac nor Izzie produce outside their production possibilities frontiers.
Giffen goods are
a. normal goods for which the income effect dominates the substitution effect. b. normal goods for which the substitution effect dominates the income effect. c. inferior goods for which the income effect dominates the substitution effect. d. inferior goods for which the substitution effect dominates the income effect.
When quantity supplied equals quantity demanded, there is:
A. disequilibrium. B. excess quantity supplied. C. a market-clearing price (equilibrium price). D. excess quantity demanded.
"An oligopoly is an oligopoly. Firms behave the same no matter what type of oligopoly it is." This statement is:
A. false. B. true. C. true of homogeneous product industries. D. None of the answers is correct.