Question

24.

Imagine Tom's annual salary as an assistant store manager is $30,000, he owns a building that rents for $10,000 yearly, and his financial assets generate $1,000 per year in interest. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his financial assets to establish a bicycle repair shop. To run the business, he outlays $15,000 in cash to cover all the costs involved with running the business, and earns revenues of $50,000. Tom should: Multiple Choice close his shop and go back to what he was doing before with his time and assets, because it was earning him $6,000 more than he's earning now. keep his shop going because he's earning a healthy $35,000 a year. keep his shop going because he's earning $5,000 more than his salary before. None are correct.

34.

Accounting profits can tell a business _______________________, and economic profits can tell a business ______________________.

Multiple Choice

• if it is making money with this venture; if it can make more money with a different venture

• if it can make more money with a different venture; if it is making money with this venture

• if it is a profitable business; if it can be any more profitable

• if it can be any more profitable; if it is profitable

41.

Suppose Bev's Bags makes two kinds of handbags—large and small. Bev rents an industrial space where she keeps the fabric, the industrial sewing machine, her measuring board and cutting shears, extra needles, thread and buttons, and labels. If Bev were to produce no bags, which of the following is true regarding Bev's costs?

Multiple Choice

• The variable cost of fabric would drop to zero.

• The fixed cost of thread would stay the same.

• The variable cost of cutting shears would drop to zero.

• All are correct.

42.

In a perfectly competitive market, producers:

Multiple Choice

• are able to sell as much as they want without affecting the market price.

• can influence the price upward by restricting output.

• often undercut the competition's price and force firms to leave the market.

• None of these is true of perfectly competitive markets.

99.

the long run outcome of the monopolistically competitive firm:

Multiple Choice

• is not efficient.

• does not maximize profits.

• is the same as the short-run outcome.

• maximizes total surplus.

100.

The long run outcome of the monopolistically competitive firm:

Multiple Choice

• occurs where price equals marginal cost.

• maximizes total surplus.

• creates welfare loss.

• does not maximize profits.

Answer 1

Answer 34) Part A) is the correct answer

Answer 41) Part D) All of the above

Answer 42) Part A) are able to sell as much as they want without affecting the market price.

Answer 99) Part B) doesn’t not maximise profit. Because in long run outcome of monopolistic competitive firm doesn’t make economic profit.

Answer 100) Part D) doesn’t not maximise profit. Because in long run outcome of monopolistic competitive firm doesn’t make economic profit.