Imagine Tom's annual salary as an assistant store manager is $30,000, he owns a building that rents for $10,000 yearly, and his financial assets generate $1,000 per year in interest. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his financial assets to establish a bicycle repair shop. To run the business, he outlays $15,000 in cash to cover all the costs involved with running the business, and earns revenues of $50,000. Has Tom made the best decision?
A. No, because he's earning an economic profit of -$6,000.
B. Yes, because he's earning an accounting profit of $35,000.
C. No, because his accounting profit is larger than his economic profit.
D. Yes, because his accounting profit is larger than his economic profit.
Answer: A
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Which of the following have a positive relationship with household saving?
I. the real interest rate II. disposable income III. expected future income A) I and II B) II only C) II and III D) I, II and III
According to the above figure, if steel mills ignore the cost of pollution, the equilibrium quantity of steel will most likely be
A) Q1. B) Q2. C) Q2 - Q1. D) none of the above.
Which of the following statements is true?
A) Real GDP fluctuates around potential GDP. B) Potential GDP fluctuates around real GDP. C) Potential GDP is the same as real GDP. D) When all of the economy?s resources are fully employed, the value of production is called real GDP.
A capital good is
A. a good that should increase in value over time. B. an intermediate product and therefore not part of GDP. C. a good that lasts more than three years. D. a good that is used to make other goods and services.