ECO2023

Dr. Sheldon Cooper quit his job as a physics professor to open his own comic book store. He gave up his $60,000 salary and invested his retirement fund of $100,00 (which was earning 20 percent interest) in this venture. His store generated $250,000 in total revenue and had $150,000 in explicit costs. Dr. Cooper's economic profits were

$20,000

Peter, a software engineer employed by Initech,sneaks into work late everyday and just sits at his desk spacing out for most the week because he has no incentive to work any harder. This is most clearly an example of

Shirking and the principle-agent problem

If a Pizza Hut restaurant near campus reduces its pizza prices by 15 percent, and as a result, its total revenue from pizza sales increases, this indicates that the price elasticity of demand was

elastic

When external benefits (positive externalities) are present in a market

less of the good will be produced than the amount consistent with economic efficiency

Gregory really enjoys eating bananas, but after eating 15 bananas in 20 minutes, Gregory says, "these are getting hard to swallow" and refuses to eat another banana. This statement best illustrates

the law of diminishing marginal utility

Demand will be more inelastic when

the time the consumer has to adjust to price changes is short

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired and your income drastically increased. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to but fewer Ramen noodles in favor of foods she prefers more. When looking at income elasticity of demand for Ramen noodles,

yours would be positive and your roommate's would be negative