Jake sells Star Wars memorabilia on eBay. His annual revenue is 42,000 per year, the explicit costs of his business are 10,000, and the opportunity costs of his business are 18,000 per year. What is his economic profit?
A) 14,000 B) 24,000 C) 32,000 D) 34,000
Question 2
Because Coke and Pepsi are substitutes, a decrease in the price of Pepsi will cause the demand for Coke to decrease.
This initial shift in demand for Coke results in a lower price for Coke; this lower price will cause the demand curve for Coke to shift to the left. Which of the following correctly comments on this statement?
A) The statement will be true if consumer tastes for Coke and Pepsi do not change.
B) The statement is false because Pepsi is an inferior good; Coke is a normal good.
C) The statement is false because one cannot assume that Coke and Pepsi are substitutes for all consumers.
D) The statement is false because a change in the price of Coke would not change the demand for Coke.
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