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Many years ago someone developed an item that was simply a small rock inside a box with ho

Many years ago someone developed an item that was simply a small rock inside a box with holes. The person earned large profits from selling "pet rocks." Which of the following theories on the source of profits best describes the reason behind this success?

a.Uncertainty is a source of profits.

b.Profit is the reward for alertness to arbitrage opportunities.

c.Profit is the return to the entrepreneur as innovator.

d.There's a sucker born every minute.

e.Sometimes all that it takes is to be in the right place at the right time.

 

 

 

73.Which of the following is not a theory of the source of profit as discussed in the text?

a.Uncertainty is a source of profits.

b.Profit is the reward for alertness to arbitrage opportunities.

c.Profit is the return to the entrepreneur as innovator.

d.Profit is the return to those who are fortunate enough to own resources.

 

 

 

74.If a firm is incurring a loss, the loss is a signal that

a.the firm is not a monopolist.

b.the firm has never enjoyed profits.

c.consumers would rather have some of the resources used by the loss maker be used to produce other goods.

d.the government has withdrawn its "protection" of the firm.

 

 

 

75.Jim Smith made his fortune by buying and selling real estate. Which of the following theories on the source of profits best describes the reason behind his success?

a.Uncertainty is a source of profits.

b.Profit is the reward for alertness to arbitrage opportunities.

c.Profit is the return to the entrepreneur as innovator.

d.Land is always a source of economic rent and profit.

e.If one works hard enough, one will be rewarded.

 

 

 

76.Risk

a.is the result of economic rent seeking.

b.is the same as uncertainty.

c.exists when the probability of a given event can be estimated.

d.exists when a potential occurrence is so unpredictable that a probability cannot be estimated.

e.none of the above

 

 

 

77.A person buys X in one market and combines it with Y purchased in another market. The combination of X and Y gives Z, which the person sells in a third market for a higher price than the sum of the prices of X and Y. Which theory of profit is most consistent with this example?

a.Profit is the return to being alert to an arbitrage (broadly defined) opportunity.

b.Uncertainty is the source of profit.

c.Profit is the return to the entrepreneur as innovator.

d.none of the above

 

 

 

78.In what sense are profit and loss signals?

a.They signal resources where to move.

b.They signal what goods consumers may want to buy and what goods they may not want to buy.

c.They are important for government and business accounting procedures.

d.a and b

 

 

 

79.An increase in the anticipated (or expected) rate of inflation will cause the nominal interest rate to

a.increase by less than the change in the anticipated inflation rate.

b.increase by the same amount as the change in the anticipated inflation rate.

c.decrease by more than the change in the anticipated inflation rate.

d.decrease by the same amount as the change in the anticipated inflation rate.

e.stay the same.

 

 

 

80.If the nominal interest rate is 14 percent and the real interest rate is 6 percent, then the expected rate of inflation is

a.20 percent.

b.6 percent.

c.8 percent.

d.-8 percent.

e.impossible to determine from the data given.

 

 

 

81.Profits are income to

a.owners of capital.

b.all factors of production in a profitable firm.

c.owners of land.

d.entrepreneurs who bear the risks of production.

e.owners of a highly productive resource.

Dec 09 2019 Read more Less More

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