If a firm has implicit costs as well as explicit costs
A) accounting profits are greater than economic profits.
B) economic profits will always be greater than accounting profits.
C) accounting profits will be equal to economic profits.
D) the firm has no economic profits.
Answer: A
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One of the ugly stepsisters argues that she, rather than Cinderella, should go to the ball because she will derive more utility from it than Cinderella. An economist would: a. agree, since the ugly stepsister's reasoning is sound
b. want to know how much utility each will receive from attending the ball in order to determine which woman should attend. c. point out that making interpersonal utility comparisons is not possible. d. ask how many balls each woman has attended in order to calculate the marginal utility that each would derive from attending, and then decide who should go to the ball.
Answer the following statements true (T) or false (F)
1. If one city has a higher CPI than another city, the city with the higher CPI must have a higher cost of living. 2. COLA is a form of indexation. 3. Only wages or income can be indexed to the CPI. 4. Indexation is a good means of reducing inflation. 5. The value or purchasing power of the dollar can be obtained by dividing $1 by the CPI.