Annie's Breakfast Corner charges $5.00 per meal. Annie's costs for servers, cooks, electricity, food, etc. average out to $3.95 per meal. Her costs for rent, insurance cleaning supplies, and business license average out to $1.25 per meal. Since the market is highly competitive, Annie should:
a. raise her prices above the level set by the market
b. keep the business open in the short run but plan to close the business in the long run.
c. keep the business open in the short run and plan to expand the business in the long run.
d. lay off her staff, break her lease, and close the business immediately.
b
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Implicit cost involves a direct cash payment for the use of a resource
a. True b. False
Rent-seeking behavior creates:
A. waste and inefficiency. B. waste, but is efficient. C. inefficiencies, but not waste. D. efficiency without waste.
If an economy is experiencing deflation, a decrease in the price level, then the most advantageous actions would be
a. borrowing money at a fixed interest rate and buying a house. b. borrowing money at a fixed interest rate and buying land. c. keeping money in a checking account. d. keeping your wealth in gold and other precious metals.
In a market with perfect competition, given enough time and no barriers to entry, profits will tend toward zero in the long run.
Answer the following statement true (T) or false (F)