Accounting profit is equal to:
A. explicit revenue minus explicit measurable costs.
B. implicit and explicit revenues minus implicit costs.
C. explicit revenue minus implicit and explicit costs.
D. implicit revenue minus implicit costs.
Answer: A
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Scarcity and shortages differ in that
A) scarcity is caused by natural disasters and shortages are caused by mistakes people make. B) scarcity is a condition of human life while shortages are usually temporary phenomena related to an imbalance between the amount desired and the amount produced. C) scarcity is a type of shortage but shortage is a broader concept. D) shortages apply to resource markets while scarcity applies to product markets.
Suppose a bank lends you $1,000 to purchase a car. Which of the following correctly represents the changes in the bank's balance sheet before you spend the money?
a. Assets: loans, +$1,000 . Liabilities and net worth: checking deposits, +$1,000 b. Assets: loans, -$1,000 . checking deposits, +$1,000 . Liabilities and net worth: no change c. Assets: loans, +$1,000 . checking deposits, -$1,000 . Liabilities and net worth: no change d. Assets: checking deposits, +$1,000 . Liabilities and net worth: loans, +$1,000 e. Assets: checking deposits, +$1,000 . Liabilities and net worth: loans, -$1,000
Excess capacity occurs in long-run equilibrium under monopolistic competition so that: a. price is less than marginal cost
b. price exceeds minimum average cost. c. marginal revenue exceeds price. d. all of the above occur.
Laissez-faire is an economic:
A. theorem because it is the logical conclusion of a model with carefully stated relationships among variables. B. precept because it is the logical conclusion of a model with widely held assumptions. C. theorem because it is based on deductive analysis of a model that is based on assumptions. D. precept because it is based on a model and normative judgments about the relevance of the model to the real world.