For most firms, the major difference between accounting profit and economic profit is that
a. explicit and implicit costs are included in the accounting profit while only explicit costs are included in economic profit.
b. accounting profit omits the salaries of managers, and therefore, it is generally greater than economic profit.
c. accounting profit is based on opportunity cost, whereas economic profit is based on market transactions.
d. accounting profit does not consider the opportunity cost of the firm's equity capital and, therefore, generally overstates economic profit.
D
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Common ownership of resources such as land can be efficient as long as
a. people are honest b. government regulates resource use c. rules for resource use are clear in assigning rights and responsibilities d. penalties for misuse are severe e. all the above are required
Even when one country has an absolute advantage in all goods and another country has an absolute disadvantage in all goods, both countries can still benefit if they trade with each other
a. True b. False Indicate whether the statement is true or false
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. There is not enough information to determine what happens to these two macroeconomic variables. b. The GDP Price Index rises, and nominal value of the domestic currency falls. c. The GDP Price Index rises, and nominal value of the domestic currency rises. d. The GDP Price Index falls, and nominal value of the domestic currency rises. e. The GDP Price Index rises, and nominal value of the domestic currency remains the same.
Refer to Table 3.2, which shows some costs and benefits of having your car repaired. What is the marginal cost of the 5th hour spent on repairs?
A. $360
B. $435
C. $510
D. $780