You purchase a pizza oven that is expected to last 10 years for $15,000. How do you account for the economic cost of the oven?
A) Expense the oven, taking a write-off for the entire price in the first year.
B) Amortize the cost over the 10 year life of the oven, resulting in a cost of $1,500 per year.
C) Calculate the value of renting the oven to someone else and use that as your cost.
D) The cost is the price of the oven minus any revenue made selling pizzas made in the oven.
C
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A firm sells a product in a purely competitive market. The marginal cost of the product at the current output level of 800 units is $3.50. The minimum possible average variable cost is $3. The market price of the product is $4. To maximize profits, the firm should
A. decrease production to less than 800 units. B. continue producing 800 units. C. increase production to more than 800 units. D. shut down.
In the market for loanable funds, the demand curve:
A. represents savers. B. is downward sloping. C. reflects that more people will choose to save the higher is the interest rate. D. is upward sloping.
According to the definitions of private and public saving, if Y, C, and G remained the same, an increase in taxes would
a. raise both private and public saving. b. raise private saving and lower public saving. c. lower private saving and raise public saving. d. lower private and public saving.
What is productive efficiency?
A) a situation in which resources are allocated to their highest profit use B) a situation in which resources are allocated such that goods can be produced at their lowest possible average cost C) a situation in which resources are allocated such the last unit of output produced provides a marginal benefit to consumers equal to the marginal cost of producing it D) a situation in which firms produce as much as possible