Amber has opened a coffee shop for many years on a piece of land that she has also owned. She has also made accounting profits from the coffee shop. This year, rents in the area rose considerably, and Amber responded by deciding to sell the land and the
coffee shop to an apartment builder. How can you explain Amber's decision to sell her business?
What will be an ideal response?
Even though Amber has been making accounting profits, her decision to sell her business was based on the opportunity cost of the land, which obviously had risen to the point that she made a negative economic profit on her coffee shop business.
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Refer to the table above. Country A has an absolute advantage in
A) beer. B) wine. C) both beer and wine. D) neither beer nor wine.
If real disposable income increases, the average propensity to consume will
A. increase. B. initially increase, and then decrease. C. decrease. D. remain constant.
Answer the following statements true (T) or false (F)
1. National income accountants eliminate double counting of intermediate goods by using only the value of final goods. 2. Current disposable income can be adjusted for price changes and population changes to yield real per capita disposable income. 3. A transfer payment is a payment of money in return for which no current goods or services are produced. 4. The value of leisure is not taken into consideration in GDP accounting. 5. When final sales are less than GDP, a net reduction in inventory has taken place.
As you move down the production possibility frontier, the absolute value of the marginal rate of transformation
A. increases. B. initially decreases, then increases. C. decreases. D. initially increases, then decreases.