Jennifer moved her law offices from an office she was renting downtown to the carriage house she has at the back of her property. How will her costs change?
a. explicit and implicit costs rise
b. explicit costs rise and implicit costs fall
c. explicit and implicit costs rise
d. explicit costs fall and implicit costs rise
d
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Suppose you are the monopoly owner of a movie theatre. You can allow people to enter the theatre at zero marginal cost, and you can provide popcorn at a constant marginal cost of $0.50 per bag. You have two customers, Larry and Terry, who are identical twins. Larry never buys popcorn under any circumstances. If you charge the monopoly price of $1.00 per bag for popcorn, Terry will buy 2 bags of popcorn and earn $0.50 in consumer's surplus, and you will earn $1.00 in profit from popcorn sales. If you charge the competitive price of $0.50 per bag for popcorn, Terry will buy 4 bags of popcorn and earn $2.00 in consumer's surplus, and you will earn no profit from popcorn sales.
(i) Suppose that Larry is willing to pay up to $8.00 to see the movie and Terry is willing to pay up to $5.00 to see the movie. How much should you charge for admission to the theatre and how much should you charge for popcorn? (ii) Suppose that Larry is willing to pay up to $4.00 to see the movie and Terry is willing to pay up to $5.00 to see the movie. How much should you charge for admission to the theatre and how much should you charge for popcorn?
If long-run economic growth is not accompanied by a change in aggregate demand, the result will be
A) persistent inflation. B) secular deflation. C) devaluation of the dollar. D) appreciation of the dollar.
In order to avoid problems involved with calculating percentage changes over a wide range, economists use the base or midpoint formula to calculate percentage changes when measuring the price elasticity of demand
a. True b. False Indicate whether the statement is true or false
In the circular flow model, businesses
A. demand both products and resources. B. supply both products and resources. C. demand products and supply resources. D. supply products and demand resources.