Which of the following statements is an explanation for the law of increasing opportunity costs?
A. Many economic resources are better at producing one product rather than another
B. The economy is employing all of its available resources
C. In any economy, the state of technology is changing and resources are variable
D. The economy is achieving productive efficiency by producing goods at the least cost
Answer: A
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You have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the Math Department. From experience, you know that going to see a movie gives you $20 worth of enjoyment, and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. Should you go see a movie or work as a math tutor?
A. You should work as a math tutor. B. You should do neither C. You should go to the movies. D. Both options are equally good.
Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting downward C. Aggregate demand shifting rightward D. Aggregate demand shifting leftward
Refer to Figure 18.1. The opportunity cost of hang gliders in the United States is
A) 1/4 of a bicycle. B) 1/3 of a bicycle. C) 3 bicycles. D) 4 bicycles.
In the long run, an increase in consumer spending would cause output to ________ and the price level to ________
A) rise; rise B) rise; stay constant C) stay constant; stay constant D) stay constant; rise