Exam 9: Decision Making by Individuals and Firms

During its only year of operation,a firm collected $175,000 in revenue and spent $50,000 on raw materials,labor,and utilities.The owners of the firm spent $100,000 of their own money to build the firm's factory (instead of buying bonds and earning a 10% annual rate of return),which they sold at the end of the year for $100,000.The firm's economic profit is:

Sunk costs:

The tendency to avoid making a decision is:

Cindy just graduated from college and started working at a large accounting firm.Although the firm will match her contributions to a retirement account,Cindy wants to wait several years before participating since there are so many things she needs to buy right now.What type of behavior does this represent?

Use the following to answer question: -(Table: TC's Pizza Parlor)Use Table: TC's Pizza Parlor.What is the optimal level of production?

After three years at an expensive college,Pierre realizes that he doesn't want to finish school but really wants to be a chef.When Pierre suggests that he leave college for culinary school,his parents insist that he stay for one more year to get his degree.Which statement is TRUE?