Suppose that during a given time period the implicit cost for a business was $1,000 and that the explicit cost was $5,000. Also suppose that the firm sold 1,000 units of its products at $5 per item. We can conclude that the firm's
A. accounting profit was $0, and economic profit was -$1,000.
B. accounting profit was $5,000, and its economic profit was $0.
C. accounting profit was $0, and economic profit was $1,000.
D. accounting and economic profits were both $0.
Answer: A
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A) profit analysis. B) market structure analysis. C) game theory. D) decision theory.
If an auto dealer wants to hire a salaried salesman but is afraid of facing the adverse selection problem, the principle can
a. Hire a salesman who has a reputation for working hard b. Monitor the salesman to prevent shirking c. All of the above d. None of the above
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A. $2,100. B. $2,200. C. $200. D. $100.
Based on the given figure, the economy is initially in long-run equilibrium at point A. If there is a favorable supply shock that increases potential output and shifts the long-run aggregate supply curve from LRAS to LRAS', then there is initially ________ gap and the short-run aggregate supply curve will ________.
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