Question

22. In the business world, there is always an opportunity cost to the money invested in a business because it can be put to another use. With this in mind, which of the following statements must always be true?

Group of answer choices

if a firm has an economic loss it must have an accounting loss.

If a firm has an economic profit it must have an accounting profit.

If a firm has an accounting break even, it must have an economic break even.

if a firm has an economic break even it must have an accounting loss.

23. Assume there is an increase in demand and a decrease in supply. What can you tell with certainty?

Group of answer choices

The equilibrium price will decrease.

The equilibrium quantity will decrease.

The equilibrium quantity will increase.

The equilibrium price will increase.

24. When a sandwich shop charged $4.00 for a sandwich it sold 240 sandwiches in a day. When it decreased the price to $3.50 it sold 270 sandwiches in a day. What is the price elasticity of demand in absolute value? Don’t round intermediate steps, but do round your final answer to two decimal places.

Group of answer choices

0.88

1.14

0.47

0.75

0.64

Answer 1

Ans 22: The correct statement is: If a firm has an economic profit it must have an accounting profit.

This is because:

Economic profit = Total revenue - (explicit cost + implicit cost)

Accounting profit = Total Revenue - explicit cost.

Ans 23: The correct answer is: The equilibrium price will increase.

The demand curve shift to right and supply curve shift to left. Assuming equal magnitude change in both the forces, this causes increase in price level but no change in quantity

Ans 24: $4 price and quantity sold is 240 sandwiches

$3.50 price and quantity sold is 270 sandwiches

They are using mid-point formula for calculating price elasticity of demand: