Bill is restoring a car and has already spent 4000 on

Info icon This preview shows pages 4–7. Sign up to view the full content.

14. Bill is restoring a car and has already spent $4000 on the restoration. He expects to be able to sell the car for $5800. Bill discovers that he needs to do an additional $2400 of work to make the car worth $5800 to potential buyers. He could also sell the car now, without completing the additional work, for $3800. What should he do?
Image of page 4

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

5 a. He should sell the car now for $3800. b. He should keep the car since it wouldn’t be rational to spend $6400 restoring a car and then sell it for only $5800. c. He should complete the additional work and sell the car for $5800. d. It does not matter which action he takes since the outcome will be the same either way. 15. A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31 st house, its total cost will increase to $7.76 million. Which of the following statements is correct? 16. In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances, what were the economic incentives ( 激勵 ) for producers? 17. England can benefit from trade 18. Trade a. allows specialization, which increases costs. b. allows specialization, which reduces costs. c. reduces specialization, which increases costs. d. reduces specialization, which reduces costs. 19. The "invisible hand" directs economic activity through
Image of page 5