Sebastian decides to open a tree farm. When deciding to open his own business, he turned down two separate job offers of $25,000 and $30,000 and withdrew $20,000 from his savings. Sebastian's savings account paid 3 percent interest. He also borrowed $20,000 from his brother, whom he pays 2 percent interest per year. He spent $15,000 to purchase supplies and earned $50,000 in revenue during his
first year. What are Sebastian's implicit costs from running his own business?
a. $30,600
b. $55,600
c. $50,000
d. $75,600
a
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Holding the real money supply constant, an increase in real money demand will reduce interest rates
Indicate whether the statement is true or false
Senator Brown wants to increase taxes on people with high incomes and use the money to help the poor. Senator Johnson argues that such a tax will discourage successful people from working and will therefore make society worse off. An economist would say that
a. we should agree with Senator Brown. b. we should agree with Senator Johnson. c. a good decision requires that we recognize both viewpoints. d. there are no tradeoffs between equity and efficiency.
Which of the following explains why the U.S. poverty threshold increased from $3,000 per year in 1963 to $25,000 per year in 2017?
A. Inflation has caused the price for basic necessities to increase since 1963. B. Americans are more spoiled now than they were in 1963. C. The threshold includes more luxury items now than it did in 1963. D. The government has become more benevolent than it was in 1963.
Which of the following examples shows a decrease in total revenue for an elastic price demand?
a. When the price of saws increases by 5 percent, the quantity demanded decreases by 9 percent. b. When the price of nails decreases by 10 percent, the quantity demanded increases by 15 percent. c. When the price of wrenches increases by 8 percent, the quantity demanded decreases by 5 percent. d. When the price of pliers decreases by 3 percent, the quantity demanded increases by 5 percent.