Economic profit
A. can be calculated by subtracting implicit costs of using owner-supplied resources from the firm's total revenue.
B. is negative when total costs exceed total revenues.
C. is a theoretical measure of a firm's performance and has little value in real world decision making.
D. is generally larger than accounting profit.
Answer: B
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Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization?
A. division of labour B. international trade C. economies of scale D. command economy
Who, among the following, is least likely to price discriminate?
A) The local tavern B) The local diner C) The local potato farmer D) The telephone company
If a CEO can type faster than her secretary, then
A) the CEO has a comparative advantage in typing. B) the CEO has neither a comparative advantage in typing, nor in management. C) the CEO should still continue performing CEO duties since the CEO has a comparative advantage in management, and the secretary should continue typing. D) the CEO should still continue performing CEO duties as well as typing since he has a comparative advantage in both management, and typing.
Continue with the power plant from the previous question, where again coal currently sells for $60 a ton but will sell for either $54 or $66 next month with equal probability. Now suppose coal can be stored for a month at the cost of $2 per ton. How would the new alternative of being able to buy coal at today's prices and store it affect the amount the power plant would be willing to pay for an
option to buy coal next month at today's prices? a. Increase its willingness to pay for the option. b. Decrease its willingness to pay for the option. c. Lead it to never pay for the option. d. No effect. The new alternative of storing would never be chosen since it is worse than simply waiting and buying at next month's uncertain price.