Which of the following is a reason why some firms do not use commission pay?
A) The best workers stay and less productive workers leave.
B) It is difficult to measure the output and attribute output to a particular worker.
C) It gives workers incentive to produce more.
D) It increases firm profits.
B
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Suppose that you lend $1,000 to a friend and he or she pays you back one year later. What is the opportunity cost of lending the money?
A) the nominal interest rate that would have been earned on the money B) There is no cost. C) the implicit cost of the money D) the real interest rate that would have been earned on the money
Suppose that a firm earned $500,000 in total revenue. At the same time, it incurred labor costs of $200,000; economic depreciation of $50,000; normal profit of $75,000; interest paid to the bank of $25,000; and used other factors of production that
cost $100,000. The economic profit earned by the firm equals A) $275,000. B) $175,000. C) $50,000. D) $200,000. E) $500,000.