Use the following information to answer the next question. Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10% interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 each. Of the $75, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. What is the economic profit generated by Extreme Gaming in the first year?
A. $160,000
B. $280,000
C. $220,000
D. $155,000
Answer: A
Economics
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Budget surpluses exist when: a. government spending exceeds its tax revenues
b. government tax revenues exceed its spending. c. government spending equals its tax revenues. d. expansionary fiscal policies increase real GDP and the price level.
Economics
Use the figure to calculate the income elasticity of demand when income increases from $25,000 to $30,000:
A. -0.1818 B. -1.0 C. 0.1818 D. 1.2 E. -1.5
Economics