Private costs are
A. costs borne solely by the individuals who incur them.
B. costs borne by private members of society rather than governmental bodies.
C. external costs borne by private firms.
D. explicit costs rather than implicit costs.
Answer: A
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Which type of borrowers were least likely to default in their mortgage at the beginning of the financial crisis?
A) those with fixed-rate mortgages who made large down payments B) those with alt-A loans C) subprime borrowers D) those with adjustable-rate mortgages
Refer to the above figure. S1 is the supply curve that includes only private costs. S2 is the supply curve that includes social costs. If the firm sets output by focusing on private costs, the per-unit external cost will equal
A) P2. B) P4 - P2. C) P4 - P1. D) P2 - P1.
A firm earning economic losses should operate in the short run as long as
A) the price per unit sold is greater than the average fixed cost per unit produced. B) the price per unit sold is greater than the average variable cost per unit produced. C) marginal revenue is at least the price per unit sold. D) the price per unit sold is equal to or greater than the marginal cost of production.
If the interest rate is 8 percent and an investment undertaken and paid for today is expected to yield $3,000 per year (to be received at year end) for each of the next three years, a profit-maximizing decision maker would undertake the investment only as long as the cost remained less than approximately
a. $5,350. b. $7,731. c. $8,109. d. $9,000.