DeShawn has spent $600 purchasing and repairing an old fishing boat, which he expects to sell for $900 once the repairs are complete. DeShawn discovers that, in addition to the $600 he has already spent, he needs to make an additional repair, which will cost another $400, in order to make the boat worth $900 to potential buyers. He can sell the boat as it is now for $400 . What should he do?
a. He should sell the boat as it is now for $400.
b. He should keep the boat since it would not be rational to spend $1,000 on repairs and then sell the boat for $900.
c. He should complete the repairs and sell the boat for $900.
d. It does not matter which action he takes; the outcome is the same either way.
c
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The following table depicts the cost and demand structure a natural monopoly faces. Provided that the firm operates as a monopolist, what is the price charged and quantity produced in order to maximize profits?
A) price charged of $900 and quantity produced of 1 B) price charged of $800 and quantity produced of 2 C) price charged of $700 and quantity produced of 3 D) price charged of $600 and quantity produced of 4
According to the rule of rational choice, an individual will undertake an activity as long as: a. the expected marginal benefits are less than the expected marginal costs. b. the expected marginal benefits are greater than the expected marginal costs. c. total expected costs exceed total expected benefits
d. total expected benefits exceed total expected costs.
Tom quit his $65,000 a year corporate lawyer job to open up his own law practice. In Tom's first year in business his total revenue equaled $150,000 . Tom's explicit cost during the year totaled $85,000 . What is Tom's economic profit for his first year in business?
a. $0 b. $20,000 c. $65,000 d. $85,000
Marginal analysis is the comparison of additional benefits with the additional costs.
Answer the following statement true (T) or false (F)