Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry's opportunity cost of attending State NoName U is:
A. $60,000
B. $15,000
C. $30,000
D. $20,000
Answer: D
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You are trying to decide whether to purchase the latest Harry Potter book online or borrow it from the library. There is no charge for borrowing a book from the library, but going to the library takes more time than ordering a book online. Regardless of how you get the book, its benefit to you is the same. If the cost of buying the book online is $13, then you should:
A. borrow the book from the library because you can get it from the library for free. B. borrow the book from the library if the cost of doing so (in terms of the extra time it takes) is less than $13. C. buy the book online because it takes less time. D. borrow the book from the library if the cost of doing so (in terms of the extra time it takes) is greater than $13.
Suppose the marginal product of labor equals 1/L. If the wage is $1 per unit of labor, what is the short-run effect on the firm's labor demand if the price of output were to double?
A) The firm will demand half as much labor. B) The firm will demand twice as much labor. C) The firm will demand the same quantity of labor. D) There is not enough information to determine.
The firm's demand curve in monopolistic competition slopes downward because
a. there are strong barriers to entry in the industry b. of product differentiation among the goods firms produce c. only few firms exist in the industry d. the market demand curve is downward sloping e. the market demand curve is horizontal
In class action lawsuits, interested parties to the lawsuit are not required to pay attorney fees directly. This is an example of an attempt to
a. maximize attorney fees. b. reduce the incentive of attorneys to file class action lawsuits. c. reduce the transaction costs of finding a private solution to an externality. d. regulate attorney fees.