A dry cleaner currently has 10 workers and 4 machines. The workers' wage rate is $300 per worker and the rental rate for a machine is $500. The last worker added 600 units to total output and the last machine also added 600 units to total output, and the last machine also added 600 units to total output. If the dry cleaner uses 11 workers and 3 machines instead, then
A. cost will be unchanged and output will decrease by 200 units.
B. cost will be unchanged and output will increase by 300 units.
C. output will be unchanged and cost will decrease by $200.
D. output will be unchanged and cost will decrease by $500.
E. none of the above
Answer: C
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The new growth theory asserts that profits are
A) temporary, because the discoveries that lead to profits are eventually used by all. B) an illusion, since costs are never fully covered. C) permanent, because physical activities can be replicated. D) not an essential component determining whether the economy grows or not. E) permanent, because they are derived from discoveries.
If the present value of all future revenue is positive, then
A) the firm should remain operating, even if it earns negative profit in the short run. B) the firm should shut down if it is earning a negative profit in the short run. C) the firm should shut down if it cannot cover its fixed costs in the short run. D) Unable to determine with the information given.
GDP measures the economy's production of:
a. final goods and services. b. intermediate goods. c. consumer goods and services. d. capital goods.
If the government increases the income tax rate, consumers have:
A. less to spend and will reduce their consumption. B. more to spend and will reduce their consumption. C. less to spend and will increase their consumption. D. more to spend and will increase their consumption.