Answer the following questions true (T) or false (F)
1. The minimum wage is an example of a price ceiling.
2. A price ceiling is a legally determined maximum price that sellers may charge.
3. Shortage means the same thing as scarcity.
1. FALSE
2. TRUE
3. FALSE
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Economists assume people's tastes are
a. determined solely by advertising b. relatively stable over time c. quite variable d. irrelevant to utility analysis e. identical
Bill is restoring a car and has already spent $4000 on the restoration. He expects to be able to sell the car for $6200 . Bill discovers that he needs to do an additional $2400 of work to make the car worth $6200 to potential buyers. He could also sell the car now, without completing the additional work, for $3800 . What should he do?
a. He should sell the car now for $3800. b. He should keep the car since it wouldn't be rational to spend $6400 restoring a car and then sell it for only $6200. c. He should complete the additional work and sell the car for $6200. d. It does not matter if Bill sells the car now or completes the work and then sells it at the higher price because the outcome will be the same either way.