Which of the following observations is true?
a. Sunk costs are irrelevant for any future action
b. Sunk costs should not be ignored when making decisions.
c. Sunk costs are often hidden.
d. Sunk costs can be recovered using corrective measures.
a
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Economists use elasticity to measure the responsiveness of quantity to a change in price rather than the slope of the demand curve because elasticity is
A) independent of the units of measurement. B) dependent on the units of measurement. C) easier to calculate. D) harder to calculate. E) always negative whereas the slope is always positive.
In the above figure, the axis break in the x-axis
A) reflects the fact that for the years covered in the figure, the unemployment rate was never less than 3 percent. B) shows that there is no relationship between inflation and unemployment. C) misleadingly shows that inflation has changed very little even though the unemployment rate has increased a great deal. D) implies that for the years covered in the figure, the inflation rate was always greater than 1 percent.
Adverse selection occurs when
A) a person takes more risks that are not known to the life insurance company because he has life insurance. B) a person buys life insurance because he has a risky lifestyle that is not known to the life insurance company. C) a person is a risk lover. D) pregnant women with health insurance make more doctor visits than uninsured pregnant women.
Use the above figure. A regulatory commission sets the maximum price this monopolist can charge at P1. If this monopolist were to produce, it
A) would produce Q4 output and generate losses. B) would produce Q4 output and generate profits. C) would produce Q2 output and generate losses. D) would produce Q2 output and generate profits.