The price system
A) is the voluntary exchange system.
B) is old fashioned and is no longer used.
C) is used only in countries that are developing.
D) is used by the government to maintain stable supply of goods.
Answer: A
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The present value of $50 to be received next year is $40. The interest rate is
A) 10 percent. B) 20 percent. C) 25 percent. D) 50 percent.
Accountants do not often report economic profits on income statements and balance sheets because:
a. economic profits are exactly the same as accounting profits, and thus they do not need to be broken out in financial statements. b. the cost of capital, while easy to measure, is very difficult to report. c. it might make some firms look as though they possessed an unfair competitive advantage over other firms. d. the cost of equity capital is very difficult to measure, and opportunity costs vary from investor to investor. e. the concept of economic profit is not firmly established in economic theory.