Candy Cane Corporation (CCC) produces 100,000 boxes of candy canes per year that sell for $3 a box. If variable costs are $2 per box and it has $125,000 in fixed operating costs, in the short run the CCC should:
A. reduce production until the break-even point is reached.
B. shut down as fixed costs are not being covered.
C. keep producing as profits are $25,000.
D. keep producing because variable costs are covered.
Answer: D
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Suppose you are given the following demand data for a product.PriceQuantity Demanded$1030940850760670Using the regular percentage change formula, what is the price elasticity of demand when price increases from $6 to $7?
A. -0.525 B. -1 C. -0.856 D. -1.166
An externality is
a. always a benefit to the recipient b. always a detriment to the recipient c. an activity that occurs in a business that is unknown to management d. an unintended benefit or cost imposed on third parties resulting from market activity e. an act, caused by a firm located in this country, that has an effect on a person in a foreign country
Which of the following is the best definition of openness?
a. The average of imports expressed as a share of GDP. b. The average of goods traded in markets expressed as a share of GDP. c. The average of imports and exports expressed as a share of GDP. d. The average trade balance expressed as a share of GDP. e. The average of exports expressed as a share of GDP.
If the price rises and the total amount consumers spend on the good falls, then demand must be
A. perfectly inelastic. B. elastic. C. perfectly elastic. D. inelastic.