question
You use $50,000 of your own money to start a catering business. During the first year you earn a 5% return on that investment.
If the current interest rate is 8%, you earn an economic profit of
If the current interest rate is 8%, you earn an economic profit of
answer
-$1,500
question
Engineers for the Off Road Skateboard Company have determined that a 10% increase in all inputs will cause output to increase by 5%.
Assuming that input prices remain constant, you correctly deduce that such a change will cause ________ as output increases.
Assuming that input prices remain constant, you correctly deduce that such a change will cause ________ as output increases.
answer
average costs to increase
question
In perfect competition, when firms are maximizing profits and households are maximizing utility,
answer
Pareto optimality has been obtained.
question
According to the MarketWatch article, Zillow is
answer
applying machine learning to data collected from website visitors to more accurately value houses for instant offers
question
Daron Acemoglu and Pascual Restrepo argue that the primary threat to workers in the near future is
answer
automation that marginally improves efficiency
question
This firm is currently hiring 16 workers and paying a wage of$10. This firm should
answer
reduce employment to 15 workers to increase profits.
question
If demand for wheat is
D2,
then a profit maximizing firm will produce _____ units and earn a profit of _____.
D2,
then a profit maximizing firm will produce _____ units and earn a profit of _____.
answer
13, $0
question
As explained in the Landsburg article, the First Fundamental Theorem of Welfare Economics states that
answer
competitive markets allocate resources efficiently.
question
If at the current output of X the
PX >MCX,
then society gains by
PX >MCX,
then society gains by
answer
producing more X
question
Which of these characteristics is Thrasio not looking for in an FBA business?
answer
A product that requires frequent "refreshing".
question
ABC Corp. is considering an investment project that costs $500 today. It expects the project will yield income of $200 at the end of years 1, 2, and 3.
If the interest rate is 10%, the firm
If the interest rate is 10%, the firm
answer
should forgo the investment
question
If the payment to labor per day is $100, this T-shirt manufacturer is maximizing profits if he will hire _____ employees.
answer
four
question
Suppose demand for wheat is initially
D2.
If the price of rice (a substitute for wheat) falls, then demand for wheat will shift to_____. This will _____ the equilibrium price of wheat and individual profit maximizing firms will produce _____ bushels of wheat.
D2.
If the price of rice (a substitute for wheat) falls, then demand for wheat will shift to_____. This will _____ the equilibrium price of wheat and individual profit maximizing firms will produce _____ bushels of wheat.
answer
D1; decrease; 0
question
Assume that the marginal cost of producing steel does not include the cost of the damage to the environment as a result of pollution.
By producing where P = MC, the firm will be producing
By producing where P = MC, the firm will be producing
answer
more than the efficient amount of steel
question
According to the Bureau of Labor Statistics, the average weekly earnings of production and nonsupervisory employees in education and health services was $822 in March 2015, up from $671 in March 2006. All else equal, such an increase in wages would be expected to reduce the quantity of labor demanded and employment should fall. Instead, the quantity demanded for labor has increased dramatically with more than 3.7 million jobs being created between 2006 and 2015.
How can you explain this seeming discrepancy?
How can you explain this seeming discrepancy?
answer
labor became more productive
question
The town council's finance committee has evaluated data and determined that the present discounted value of the benefits from a proposed dog park comes to $3.25 million. The total construction cost of the dog park is $2.5 million. This implies that the dog park should be built.
Do you agree with this conclusion? Explain your answer.
Do you agree with this conclusion? Explain your answer.
answer
It
should
be built at a cost of
$2.5 million because its present value is greater
than that amount.
should
be built at a cost of
$2.5 million because its present value is greater
than that amount.
question
The town council's finance committee has evaluated data and determined that the present discounted value of the benefits from a proposed dog park comes to $3.25 million. The total construction cost of the dog park is $2.5million. This implies that the dog park should be built.
If the interest rate decreases, the likelihood that the dog park should be built will ____________.
If the interest rate decreases, the likelihood that the dog park should be built will ____________.
answer
increase, because future benefits will be discounted by less
question
In the short run average costs eventually increase because of ________, and in the long run average costs eventually increase because of ________.
answer
diminishing returns; diseconomies of scale
question
Tom borrowed $40,000 from his parents to open a donut stand. He agrees to pay his parents a 5% yearly return on the money they lent him. His other yearly fixed costs equal $10,000. His variable costs equal $25,000. He sold 40,000 dozen donuts during the year at a price of $2.00 per dozen.
Tom's profit is
Tom's profit is
answer
$43,000
question
The number of seats available in a stadium is fixed at 80,000. The equilibrium price for a ticket to a football game at the stadium is $30. The equilibrium price for a ticket to a soccer match at the stadium is $10.
Which of the following is true?
Which of the following is true?
answer
The demand for each football game must be more than the demand for each soccer match.
question
In Glaeser's analysis of the economics of a high-speed rail line between Dallas and Houston, which assumption has the largest effect on his calculated bottom line?
answer
An interest rate (cost of capital) of 5 percent
question
For a given firm, MRPL = $225 and MRPK = $225 while PL = $100 and PK = $20.
Is the firm maximizing profits? Why or why not?
Is the firm maximizing profits? Why or why not?
answer
No, because
MRPLPL
is
less
than
MRPKPK.
MRPLPL
is
less
than
MRPKPK.
question
If the interest rate is 9%, Nashbar Bicycle's total investment would be
answer
$1,100,000
question
GM decides to build a new plant using retained earnings. All of the following are true except
answer
GM is avoiding experiencing opportunity costs.
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