If a firm hires labor for $20,000, pays rent of $12,000, buys raw materials for $6,000 from another firm, earns profits of $3,000, and sells its output for $41,000, the value added by the firm is _____
a. $0
b. $15,000
c. $35,000
d. $38,000
e. $41,000
c
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Variable costs are
a. costs that vary with output b. not important in decision making c. costs that do not vary with output d. equal to total costs
Alyssa runs a "Dessert of the month" delivery service. To operate her business each year, she spends $30,000 on baking supplies (flour, sugar, etc.), $50,000 on rent for her shop, and $5,000 for utilities. She owns her delivery van, estimating that in alternate uses it could generate $15,000 in income per year. Alyssa has other funds tied up in the business that could earn her $2,000 per year in interest. Alyssa has been offered $50,000 to work full time at a competing bakery. Her bakery generates $160,000 per year in revenue from subscriptions to her monthly service.Based on the information above, which of the following is true about Alyssa's costs and profits?
A. Alyssa's explicit costs are $67,000 and her implicit costs are $85,000. B. Alyssa's explicit costs are $85,000 and her accounting profits are $75,000. C. Alyssa's accounting profits are $8,000 and her economic profits are $75,000. D. Alyssa's implicit costs are $67,000 and her economic profits are $93,000.
The basic problem in economics is
A. unlimited resources. B. differences in people's tastes and preferences. C. scarcity. D. limited needs.
Even when the demand for one good is high, the price of the good is also affected by supply. The textbook illustrates this by comparing the price of two items that were auctioned on the same day. Which of the following describes the results of the
auction? A) A letter written by Abraham Lincoln sold for a higher price than a letter written by John Wilkes Booth. B) A letter written by Abraham Lincoln was sold for a higher price than a letter written by Adam Smith. C) A letter written by John Wilkes Booth sold for a higher price than a letter written by Lee Harvey Oswald. D) A letter written by John Wilkes Booth sold for a higher price than a letter written by Abraham Lincoln.