Refer to Figure 4.2. The income effect on the quantity of clothing purchased is:
A) the change from C1 to C3.
B) the change from C1 to C2.
C) the change from C2 to C3.
D) the change from C3 to C2.
E) none of the above
C
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A person is preparing for a long automobile trip and cashes in a certificate of deposit for cash in case of emergencies along the way. This is an example of the
A) transactions demand for money. B) asset demand for money. C) precautionary demand for money. D) wealth demand for money.
The evidence indicates that during the 1770s, the American colonists were
(a) among the most heavily taxed people in the European world. (b) among the most lightly taxed people in the European world. (c) taxed at a rate that was similar to other people in the European world. (d) taxed at rates that can't be compared to other rates due to lack of data.
In the long run, profits will equal zero in a competitive market because of
A) constant returns to scale. B) identical products being produced by all firms. C) the availability of information. D) free entry and exit.
Refer to Scenario 9.10 below to answer the question(s) that follow. SCENARIO 9.10: Investors put up $1,040,000 to construct a building and purchase all equipment for a new cafe. The investors expect to earn a minimum return of 10 percent on their investment. The cafe is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $2,000 in other fixed costs. Variable costs include $2,000 in weekly wages, and $600 per week in materials, electricity, etc. The cafe charges $6 on average per meal.Refer to Scenario 9.10. The economic profit is
A. -$3,600. B. -$1,200. C. $0. D. $5,400.