Accountants do not often report economic profits on income statements and balance sheets because:
a. economic profits are exactly the same as accounting profits, and thus they do not need to be broken out in financial statements.
b. the cost of capital, while easy to measure, is very difficult to report.
c. it might make some firms look as though they possessed an unfair competitive advantage over other firms.
d. the cost of equity capital is very difficult to measure, and opportunity costs vary from investor to investor.
e. the concept of economic profit is not firmly established in economic theory.
d
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Economists may disagree about how to solve an economic problem because they
A. may not be able to use the same models. B. always make the same value judgments. C. are unable to assemble all of the necessary facts about the economy. D. All of these responses are correct.
If personal income tax rates are decreased in an attempt to stimulate spending, we should expect to see
A. an increase in consumption and an increase in GDP. B. an increase in consumption and a decrease in GDP. C. a decrease in consumption and a decrease in GDP. D. a decrease in consumption and an increase in GDP.
Refer to the figure below, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S2?
A. An increase in the price of fertilizer
B. A change in consumer tastes away from cornbread
C. A decrease in consumer incomes, assuming corn is a normal good
D. The development of a more effective insecticide against corn rootworm
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point B to Point D, the opportunity cost of motorcycles, measured in terms of hybrid cars,
A. increases B. remains constant. C. initially increases, then decreases. D. decreases.