The term investment as it is used by an economist refers to
A. the creation of new capital.
B. the net worth of a company's financial assets.
C. the act of buying a share of stock or a bond.
D. a household's savings.
Answer: A
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If a short-run fixed cost is sunk, then
A) losses can be minimized by shutting down. B) the firm should keep producing to cover the sunk cost. C) the cost cannot be avoided by shutting down. D) Both B and C.
Assume that a firm's marginal revenue curve intersects the rising portion of the marginal cost curve at 100 units of output. At this output level, a profit-maximizing firm's total cost is $1,000 . If the price of the product is $3 per unit and the firm produces at the profit-maximizing level, the firm will earn an economic profit equal to:
a. -$1,000. b. -$700. c. -$400. d. -$600. e. $200.
In the market for loanable funds in an open economy, international investment captures all of the following sources except:
A. capital outflow. B. capital inflow. C. money invested outside its originating country. D. national savings.
Explain what economic efficiency is. How does a price system lead to economic efficiency?
What will be an ideal response?