Mika borrows $100,000 to start up her own beauty shop. She pays 5 percent interest on her loan. In order to account for all costs of her business, Mika must not forget:
A. the explicit cost of $5,000.
B. the implicit cost of $5,000.
C. the explicit cost of $105,000.
D. the implicit cost of $100,000.
Answer: A
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When people purchase health insurance and then change their behavior after the purchase because the insurance protects them from loss, the health insurance market is said to face the problem of
A) asymmetric information. B) moral hazard. C) adverse selection. D) the rationality paradox.
If the short-run aggregate supply increases by less than the long-run aggregate supply, then, at the short-run equilibrium,
A) GDP will be above potential GDP. B) aggregate demand will increase. C) GDP will be below potential GDP. D) GDP will be equal to potential GDP.
In the perfectly competitive model, all firms are assumed to be producing: a. products that are heavily advertised. b. differentiated products
c. identical products. d. complementary products.
The total quantity of goods and services demanded by households, firms, foreigners, and government at varying price levels is
a. real GDP b. aggregate demand c. market demand d. total demand e. nominal GDP