Mr. Sweet opened a candy store. He rented a building for $30,000 a year. During the first year of operation, Sweet paid $40,000 to his employees, $10,000 for utilities, and $20,000 for goods he bought from other firms. His total revenue was $135,000
Sweet's best alternative to running this candy store is to work for Wal-Mart as a sales associate for $15,000 a year. What is Sweet's total opportunity cost? A) $15,000
B) $100,000
C) $135,000
D) $115,000
D
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A key contribution of Ronald Coase is that he pointed out that private transactions are efficient when the number of parties involved is small
A) and when property rights are well defined and transactions costs are low. B) and when property rights do not exist. C) and that property rights are irrelevant to the existence of externalities. D) and when corporations are not greedy.
Which of the following would be classified as a short-run decision?
A) A firm's decision to decrease the amount of electricity used in day-to-day operations by encouraging employees to adopt conservation strategies, e.g., shut off lights when leaving a room. B) A restaurant's decision to increase the number of patrons it can accommodate by adding on a new dining room. C) A trucking firm's decision to move to a smaller facility. D) A university's decision to add a new residence hall.