Which of the following statements is definitely true when price is less than average total cost for a firm producing the profit-maximizing level of output in the short run?
A) The firm is running a loss in an accounting sense, so that total revenue is less than total explicit costs.
B) The firm will minimize its losses by shutting down.
C) The firm will be earning negative total revenue.
D) The firm is incurring an economic loss.
D
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In the economy of Confoundia, 500 people have jobs, 1000 people are not working but are searching for work, and 2000 people don't work and don't seek work. The unemployment rate is
A) 25 percent. B) 33 percent. C) 40 percent. D) 50 percent. E) 66 percent.
Regarding economic growth and income levels, which of the following is true?
a. Poor countries are unable to ignite the growth process unless they receive financial aid from richer countries. b. Countries that lack an abundance of natural resources have been unable to grow and achieve high income levels. c. Countries with a large population relative to their land area are destined to remain poor. d. Countries that fail to adopt institutions and policies supportive of trade, entrepreneurial discovery, and private investment will remain poor in the foreseeable future.
Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The table below shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. Quick Burger Operates aDrive-Through WindowQuick Burger Does NotOperate Drive-Through WindowQuick Burger$24,000$15,000The Sunshine Café$11,000$23,000Is it socially optimal for Quick Burger to operate a drive-through window?
A. Yes, because total payoffs are higher when Quick Burger operates a drive-through window. B. No, because The Sunshine Café's payoff is lower when Quick Burger operates a drive-through window. C. Yes, because Quick Burger's payoff is higher when Quick Burger operates a drive-though window. D. No, because total payoffs are higher when Quick Burger does not operate a drive-through window.
People often complain about price gouging after a disaster such as a wildfire. Suppose the government successfully prevented price increases due to the disaster. We would expect
A. reconstruction to take less time because the demand for materials would increase faster. B. reconstruction to take less time because the government could rebuild more quickly when people are not in the way. C. reconstruction never to occur. D. reconstruction to take longer because the quantity supplied of new materials would increase more slowly.