Which of the following statements regarding historical costs is correct?
A) Historical costs represent what the firm paid for an input when it was purchased, adjusted for inflation.
B) Historical costs vary depending on the method of depreciation a firm uses.
C) Historical costs are a good indicator of the current opportunity cost of a piece of capital.
D) Using historical costs can cause true economic profit to be under or over stated.
D
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Upward mobility for those in poverty is
A. Not likely to happen at all because most people live in a caste system. B. More likely for people in poor nations than in rich nations. C. More likely for people in rich nations than in poor nations. D. Equally likely for people in rich nations and poor nations.
Jason, a high-school student, mows lawns for families in his neighborhood. The going rate is $12 for each lawn-mowing service. Jason would like to charge $20 because he believes he has more experience mowing lawns than the many other teenagers who also
offer the same service. If the market for lawn mowing services is perfectly competitive, what would happen if Jason raised his price? A) He would lose some but not all his customers. B) Initially, his customers might complain but over time they will come to accept the new rate. C) If Jason raises his price, he would lose all his customers. D) If Jason raises his price, then all others supplying the same service will also raise their prices.
In a perfectly competitive market that is in long-run equilibrium, which of the following will NOT occur?
A) Firms make only zero economic profit. B) Firms' owners earn a normal profit. C) The price equals the minimum average total cost. D) Entrepreneurs want to enter this industry.
The ________ model focuses on the relationship between total spending and real GDP in the short run, assuming the price level is constant
A) supply and demand B) national income C) business cycle D) aggregate expenditure