A new technology is discovered which results in all new cars producing 50 percent less pollution. Which of the following is true?
A) Real GDP increases because the air is cleaner, but nominal GDP does not change since air is free.
B) GDP will increase to reflect the fact that the air we breathe is cleaner.
C) GDP will increase if there is an increase in the production cost and price of the car.
D) GDP increases anytime pollution is reduced.
E) GDP will decrease.
C
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In the short run, a perfectly competitive firm can
A) only make an economic profit. B) only make zero economic profit. C) only incur an economic loss. D) make an economic profit, zero economic profit, or incur an economic loss.
A bagel shop sells fresh baked bagels from 5 a.m. until 7 p.m. every day. The shop does not sell day-old bagels, so all unsold bagels are thrown away at 7 p.m. each day. The cost of making and selling a dozen bagels is $1.00; there are no costs associated with throwing bagels away. If the manager has 8 dozen bagels left at 6:30 p.m. on a particular day, which of the following alternatives is most
attractive? a. Lower the price of the remaining bagels, even if the price falls below $1.00 per dozen. b. Lower the price of the remaining bagels, but under no circumstances should the price fall below $1.00 per dozen. c. Throw the bagels away and produce 8 fewer dozen bagels tomorrow. d. Starting tomorrow, lower the price on all bagels so they will all be sold earlier in the day.