All the production points that lie above the total product curve are inefficient
Indicate whether the statement is true or false
FALSE
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Sally quit her job as an auto mechanic earning $50,000 per year to start her own business. To save money she operates her business out of a small building she owns which, until she started her own business, she had rented out for $10,000 per year
She also invested her $20,000 savings (which earned a market interest rate of 5% per year) in her business. You are given the following information about the first year of her operations. Total revenue $120,000 Cost of labor 40,000 Cost of materials 15,000 Equipment rental 5,000 a. Calculate her economic costs. b. Calculate her accounting costs. c. Calculate her implicit costs. d. Sally tells you that she would really like to move to a location closer to town but she decided against it because "right now I don't pay any rent and it will cost me $10,000 a year to rent near town." Do you agree with her reasoning?
The PDV of a perpetuity with a yearly payment of $500 at an interest rate of 5% is
A) $100. B) $5,000. C) $25,000. D) $10,000. E) $100,000.
Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that
a. the United States should produce more pork than what it requires and export some of it to Mexico. b. the United States should produce a moderate quantity of pork and import the remainder of what it requires from Mexico. c. the United States should refrain altogether from producing pork and import all of what it requires from Mexico. d. Mexico has nothing to gain from importing United States pork.
Differences between trade partners in real hourly wage rates for unskilled labor illustrate
a) the fallacy of the factor-price equalization theorem b) the importance of different capital endowments c) discrepancies between nations in accounting procedures d) the principle of comparative advantage e) the disequilibria created by international trade