Explain whether each of the following is a fixed cost or a variable cost for Damian Dandridge's tattoo parlor
a. The payment he makes to buy tattoo ink.
b. The wages he pays his employees.
c. The $500-per-month payment he makes to advertise his shop on highway billboards.
d. The lease payment he makes to the landlord who owns the building where his shop is located.
e. The payment he makes on his liability insurance policy.
c, d, and e are fixed costs because they do not change as the quantity of tattoos produced increases. a and b are variable costs because they increase as the quantity of tattoos produced increases. It is important to note that the time period under consideration is important. In the long run, all of these costs are variable.
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The most important developments that reduced banks cost advantages include
A) the growth of the junk bond market. B) the competition from money market mutual funds. C) the growth of securitization. D) the growth in the commercial paper market.
A politician says that the government should tax behavior they want less of and subsidize behavior they want more of. This is an example of
A) cynical behavior in modern democracies. B) failing to consider the alternatives available to the government. C) a concern that people are not rational when they make decisions. D) using incentives to alter behavior.