Suppose that a firm can invest $100 today in a project and receive $105 a year from today. There is no inflation, and the annual interest rate in the economy is 6%. The firm should
A) invest in the project because the opportunity cost is greater than the return on the investment.
B) not invest in the project because the opportunity cost is greater than the return on the investment.
C) invest in the project because the opportunity cost is less than the return on the investment.
D) invest in the project because the opportunity cost is the same as the return on the investment.
B
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A sunk cost is one that
a. does not vary with the level of output. b. increases as the firm's production increases. c. measures the value of the firm's self-owned resources. d. can no longer be avoided.
Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts less than the demand curve. As a result
A) both the equilibrium price and quantity of MP3 players will decrease. B) the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease. C) both the equilibrium price and quantity of MP3 players will increase. D) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease.
Macroeconomics deals with ________ while microeconomics deals with ________
A) choices important to people; choices not important to people B) economywide choices; choices of individuals C) choices that involve money; choices that does not involve money D) choices of rich people; choices of poor people
Five possibilities are equally likely and have payoffs of $2, $4, $6, $8, and $10 . The expected value is:
a. $4 b. $5 c. $6 d. $7