Which of the following statements is FALSE?
A. The major difference between accounting and economic profit is that accounting profit does not reflect the opportunity cost of using resources.
B. A correct measure of a firm's economic cost includes both accounting and opportunity cost.
C. The accounting profit earned by a firm will always be the same as its economic profit.
D. The accounting profit of a firm is its total revenue minus total explicit costs.
Answer: C
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In September 2014, 32 percent of unemployed workers had been unemployed for 6 months or more. This long-term unemployment is of particular concern because
A) long-term unemployment is the most costly type of unemployment. B) the U-3 unemployment rate no longer includes these workers in the measurement since they are long-term unemployed. C) the employment-to-population ratio no longer includes these workers in the measurement since they are long-term unemployed. D) the labor force participation rate no longer includes these workers in the measurement since they are long-term unemployed.
For a cruise liner deciding how to price its rooms, if the cost of overpricing is higher than the cost of underpricing, then the management of the cruise liner should
a. Price lower than what they expect would fill capacity b. Price higher than what they expect would fill capacity c. Price such that they would expect to just fill capacity d. None of the above
Public transit offers discounted monthly passes to students, which can only be bought and used with valid student IDs. The transit system is using
a. A direct discrimination scheme b. An indirect discrimination scheme c. The Robinson-Patman act d. None of the above
If you believe that stock prices follow a random walk, then probably you
a. do not believe that there is positive relationship between risk and return. b. do not believe that stock prices reflect all available information. c. believe in the validity of the efficient markets hypothesis. d. believe that it is a good idea to engage in fundamental analysis.