Molly Sharp is producing a documentary about the plight of the six-toed ferrets of Sri Lanka. Molly has spent 125,000 of her own money on this project and the documentary is now complete.
Molly just found out that no studio is willing to release her documentary and she must now shop it to cable television networks, where she knows she will not be able to recoup her investment. Which of the following statements regarding Molly Sharp's documentary is true?
A) The 125,000 investment is an economic cost, and she will still make an accounting profit even if the television network willing to air her documentary pays her less than 125,000.
B) She should not try to have her documentary aired on television because she cannot recoup her 125,000 investment.
C) Since the 125,000 is a sunk cost, she should still try to have her documentary aired on television even though she will not see a profit.
D) The 125,000 is a variable cost, so will not be incurred if she chooses not to have her documentary aired.
Question 2
Refer to Table 19-1. Suppose that a simple economy produces only four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all of the coffee beans are used in the production of the coffee drinks.
Using the information in the above table, nominal GDP for this simple economy equals
A) 3,090 units. B) 7,250. C) 8,750. D) 9,750.
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