A sustained decrease in the price level is known as
A) inflation.
B) disinflation.
C) reflation.
D) deflation.
D
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The profits a corporation keeps to finance future expansion are known as
A) preferred stock. B) dividends. C) retained earnings. D) capital gains.
Suppose a sole proprietorship is earning total revenues of $100,000 and is incurring explicit costs of $75,000. If the owner could work for another company for $30,000 a year, we would conclude that:
A) the firm is incurring an economic loss. B) implicit costs are $25,000. C) the total economic costs are $100,000. D) the individual is earning an economic profit of $25,000.
The amount of compensation associated with the income effect of a price change is called:
A. a compensation variation. B. an income effect. C. consumer surplus. D. a subsidy.
If the price were $15, what would this firm do in the (a) short run? (b) the long run?
