Suppose that you have returned from your fishing expedition with 20,000 fish. The market price is $3 per fish. Your average fixed cost was $1 and your total variable cost was $5,000 . If the price jumps to $3.50 before you sell your first fish, how much extra profit, if any, do you earn?
a. c and d.
b. Extra profit is zero.
c. Extra profit is enough to cover half of the fixed cost of your next trip.
d. Extra profit is enough to cover all of the variable costs of your next two trips.
e. Extra profit is $45,000.
d
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The significant difference between adverse selection problems and moral hazard problems is
a. that adverse selection refers to bad luck, moral hazard refers to bad behaviors. b. that adverse selection applies to markets for goods, moral hazard applies to markets for services. c. only identifiable after an action has been taken. d. that in adverse selection one group of people starts out at a higher risk, while in moral hazard problems, people incur additional risks.
In the simple trade model, what is assumed about labor?
What will be an ideal response?
A Lorenz curve that represents an unequal income distribution is
A. a vertical line. B. a straight line starting at 100% C. a straight line starting at the origin. D. a bowed curved.
The cost disease of the service sector in recent years is the result of
A. market failure. B. government intervention. C. collective bargaining by unions. D. uneven productivity growth.