Which of the following statements is true?
a. Accounting profit usually is greater than economic profit.
b. Accountants ignore explicit costs in calculating profit.
c. Explicit costs fall as output increases.
d. Advertising is an implicit cost.
e. Economic profit always increases as output increases.
A
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Suppose Bev's Bags makes two kinds of handbags-large and small. Bev rents an industrial space where she keeps the fabric, the industrial sewing machine, her measuring board and cutting shears, extra needles, thread and buttons, and labels. Bev can produce three bags an hour, regardless of the size of bag. Which of the following would be considered a fixed cost of this company?
A. The rent Bev pays B. The fabric C. The sewing thread D. None of these would be considered a fixed cost.
Mary is a waitress who, when tips are included, earns $15 per hour. Mary chooses to work 40 hours per week. Assume there are no taxes, so Mary earns $600 per week. A slowdown in the restaurant's business cuts Mary's hourly wage in half, to $7.50 per hour. To compensate Mary for the lost income, Mary's rich parents begin sending a gift of $300 per week.
(i) Design an indifference curve-budget line diagram illustrating this situation. (ii) Does Mary now choose to work more or fewer hours? Does Mary's consumption rise, fall, or remain unchanged? Is Mary now better off or worse off?
The assumptions that form the basis of any economic model are referred to as:
A. theorems. B. objectives. C. building blocks. D. precepts.
In short-run equilibrium, a perfectly competitive firm can never earn an economic profit.
Indicate whether the statement is true or false