Figure 10.6 shows prices, demands, and cost data for the only restaurant in a small town. Compared to the profit under the single price policy, how much additional profit does the restaurant earn under the senior discount policy of a $7 senior price and a $10 non-senior price?
A. $920
B. $580
C. $300
D. $280
Answer: B
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When the Fed lowers the federal funds rate and the real interest rate falls, what happens to the opportunity cost of investment? What happens to investment?
What will be an ideal response?
Based on Scenario 1 above critically evaluate the following statement. "Because of the disparities in skills between these two men it will not be beneficial for them to trade with one another."
What will be an ideal response?
In August 1988, the Los Angeles Kings hired Wayne Gretzky for $15 million in cash. The hockey team’s decision must have been based on the expectation that
A. Gretzky’s opportunity cost will exceed $15 million. B. Gretzky’s marginal revenue product will equal or exceed $15 million. C. the team’s total revenue will equal $15 million. D. Gretzky’s marginal revenue product will rise in the long run.
Fiscal policy:
a. Is a powerful tool because budget deficits add directly to Aggregate Demand with no offsetting changes in consumption, investment, and/or net exports. b. May not be a powerful tool if most government expenditures are fixed and unchangeable in the short run. c. Is not a powerful tool because the government has very little control over a nation's monetary base and/or money multiplier. d. Is a powerful tool because of the decisive movements in the automatic stabilizers.