Which of the following statements demonstrates an understanding of the importance of sunk costs for decision making?
I. "Even though I hate my MBA classes, I can't quit because I've spent so much money on tuition."
II. "To break into the market for soap our firm needs to spend $10M on creating an image that is unique to our new product. When deciding whether to develop the new soap, we need to take this marketing cost into account."
A) I only
B) II only
C) Both I and II
D) Neither I nor II
B
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In recent years, the number of farms has fallen while the average farm size has increased. What concept may explain this phenomenon?
a. diminishing marginal returns b. declining productivity c. diseconomies of scale d. economies of scale e. good weather in midwestern states
The opportunity cost of an action is:
a. the monetary payment the action required. b. the total time spent by all parties in carrying out the action. c. the value of the best opportunity that must be sacrificed in order to take the action. d. the cost of all alternative actions that could have been taken, added together.
If income is $40 billion, the price level is 10, and the stock of money is $20 billion, what is the velocity of money?
A. 0.8 B. 5 C. 8 D. 20
"From each according to his ability; to each according to his needs" is from
A. The Communist Manifesto. B. The Capitalist Manifesto. C. The Socialist Manifesto. D. The Fascist Manifesto.