Which of the following statements demonstrates an understanding of the importance of sunk costs for decision making?
I. "Even though I hate my MBA classes, I can't quit because I've spent so much money on tuition."
II. "To break into the market for soap our firm needs to spend $10M on creating an image that is unique to our new product. When deciding whether to develop the new soap, we need to take this marketing cost into account."
A) I only
B) II only
C) Both I and II
D) Neither I nor II
B
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When there are externalities, economic efficiency can be achieved without government intervention
A) at no time. B) when the externality affects many people and property rights are not well defined. C) when the externality affects many people and property rights are well defined. D) when the externality affects only a few parties and property rights are not well defined. E) when the externality affects only a few parties and property rights are well defined.
Answer the next question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year.YearUnits of OutputPrice per Unit18$22103315441855206In year 4, nominal GDP would be ________.
A. $316 B. $60 C. $120 D. $90