Dana spends $10,000 on remodeling a storefront that she then opens as a shoe store. The business has not been very successful, and she needs an additional $3,000 to keep the shoe store open. Which of the following is true?
A. The $10,000 Dana spent on remodeling is a fixed cost of her business.
B. The $10,000 Dana spent on remodeling represents a part of the total variable cost of her business.
C. The $3,000 Dana needs to keep the deli open represents her total fixed costs.
D. The $3,000 represents her marginal costs of production.
Answer: A
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Assume the central bank decides to pursue contractionary monetary policy. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real goods market with aggregate demand shifting to the left. b. Start the analysis in the real goods market with aggregate demand shifting to the right. c. Start the analysis in the real credit market with demand for real credit shifting to the left. d. Start the analysis in the real credit market with demand for real credit shifting to the right. e. Start the analysis in the real credit market with supply of real credit shifting to the left.
Bob just got laid off and now has no income. We can assume that his demand for all:
A. all inferior goods will decrease. B. all normal goods will stay the same. C. all normal goods will increase. D. all inferior goods will increase.
The expected damage to innocent third parties per unit of the good produced is shown as the "external cost" in Figure 27.1. An unregulated competitive market for the product produces a quantity of Q* units, which sell for a price of P* per unit. The competitive industry would produce the socially optimal quantity of this product if the expected per unit cost to producers of this product due to just and reasonable lawsuits were 
A. greater than the external cost. B. equal to the external cost. C. greater than zero but less than the external cost. D. zero.
Using the above figure, which of the following quantities of CDs has the largest deadweight loss?
A) 3 million CDs B) 4 million CDs C) 7 million CDs D) The deadweight losses associated with the three quantities given above are all equal.