A department store buys a wool coat for $120 and sets its retail price at $300 . The coat costs $85 to produce. When the coat doesn't sell, the store marks the price down to $200, then $100, and finally $70 . At $70, Amy buys the coat. What was the coat's true value? Why?
Since the coat sold for $70, we would have to say that this is its value. In economics, the value of a product is assigned when a trade is made. Retail prices, costs of production, etc. are not relevant when assigning value. Goods are valued based on what individuals will give for them.
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In the short run, a perfectly competitive firm can
A) only make an economic profit. B) only make zero economic profit. C) only incur an economic loss. D) make an economic profit, zero economic profit, or incur an economic loss.
From the standpoint of society as a whole, rent seeking is
a. counterproductive because it takes resources away from the creation of wealth in the private sector. b. counterproductive because it fails to alter public policy. c. productive because each interest group gains more than they spend on rent-seeking activities. d. productive because the resources used in rent seeking have no opportunity cost to society.
The price elasticity of supply is
A) negative. B) zero. C) positive. D) unknown, depending on other factors.
Diminishing marginal returns and diseconomies of scale are two different names for the same thing
Indicate whether the statement is true or false