Okun's law shows that when the unemployment rate is above the natural rate,
A) inflation is higher than expected.
B) inflation is lower than expected.
C) output is below potential.
D) output is above potential.
C
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We allocate resources efficiently when
A) marginal benefit is equal to marginal cost. B) marginal benefit is greater than marginal cost by any amount. C) marginal cost is greater than marginal benefit. D) total benefit is greater than total cost. E) marginal benefit is greater than marginal cost by as much as possible.
Sophia has a business using no owned capital and makes an accounting profit of $52,000 a year. Sophia could have worked for Verizon Wireless with a pay of $35,000 a year, but she would not have had time to run her business. The economic profit from Sophia's business per year is
a. $87,000. b. $35,000. c. $17,000. d. -$17,000.