Jeremy is thinking of starting up a small business selling NASCAR memorabilia. He asks his friend, Carmen, if she'd like to join him in setting up a partnership to start the business. What is one disadvantage in joining the partnership that Carmen should
consider?
A) Carmen should realize that profits in the partnership will be reduced by dividend payments to shareholders.
B) Carmen should realize that, as an owner of the business, she will be personally responsible for the debts of the business.
C) Carmen should realize that the profits of the business will also be taxed as dividend income, so she faces the potential for double taxation of that business income.
D) Carmen should realize that the Jeremy will have complete control over the business because it was his idea.
Answer: B
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Kyle and Stan are playing Odds or Evens, where Kyle is designated as the "odd" player and Stan is designated as the "even" player. They decide to play the game 10 times. The mixed-strategy equilibrium in this zero-sum game occurs when
A) each player plays a pure strategy. B) one player plays a pure strategy and the other plays a mixed strategy. C) both players play their ideal mixtures. D) There is never an equilibrium in a zero-sum game.
Refer to Table 13-3. What is the amount of the firm's loss at its optimal output level?
A) $0 B) $41 C) $45 D) $50
Refer to the above figure. Which panels represent long run equilibrium for the perfectly competitive firm and monopolistic competitive firm, respectively?
A) Panel C and Panel A B) Panel C and Panel B C) Panel B and Panel C D) Panel C and Panel D
A firm is using 50 units of labor and 100 units of capital to produce 2,000 units of output. The price of labor is $200 per unit and the price of capital is $100 per unit. At these input levels, another unit of labor adds 400 units to output and another unit of capital adds 600 units to output. The firm
A. is minimizing the cost of producing 2,000 units of output. B. could produce 6 more units of output at the same cost by switching $1 from labor to capital. C. could produce 4 more units of output at the same cost by switching $1 from labor to capital. D. could keep output constant and reduce cost by using more capital and less labor. E. both c and d