A business produces eight items and sells them for $25 each. The total cost of producing the items is $190 for explicit costs and $200 for implicit costs. Accounting profit is:
A. $20.
B. $200.
C. ?$190.
D. $10.
Answer: D
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If technological advances lower the cost of computer chips, in the market for computers the equilibrium price will ________ and the equilibrium quantity will ________
A) fall; increase B) fall; decrease C) rise; increase D) rise; decrease
Which of the following illustrates double counting?
A) The total market value of the steel used to produce a car and the total market value of the car itself are summed. B) The total market value of tennis rackets and the total market value of tennis balls are summed. C) The total market value of picture frames and the total market value of camera film are summed. D) The total market value of eyeglasses and the total market value of carpet are summed. E) b and c
Suppose there is a fiscal expansion in the current period. This fiscal expansion will tend to cause a smaller increase in current output when
A) an increase in current output causes an increase in expected future output. B) an increase in the current interest rate causes expectations of expansionary monetary policy in the future. C) an increase in the current interest rate causes an increase in expected future interest rates. D) both A and B E) all of the above
Answer the following statements true (T) or false (F)
1. The income and substitution effects will both induce the consumer to buy more of a normal good when its price decreases. 2. Someone who pays $800 to fly from one city to another instead of paying only $100 for a bus trip between the two cities is making an irrational choice and is thus not maximizing his utility. 3. If consumers are convinced by ads that Brand X has a lot more value than they originally thought, then the MU/P of X will decrease. 4. The budget line shows all the combinations of two products which the consumer can buy, given money income and product prices. 5. If the quantity of X is measured on the horizontal axis and the quantity of Y on the vertical, then the slope of the budget line is equal to the price of X divided by the price of Y.