BAE, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. BAE is producing the aircraft at the lowest possible cost. If the RAF orders one more Tornado, there will be
A) a decrease in opportunity costs as average costs decrease.
B) a misallocation of resources.
C) an increase in opportunity cost for Tornados.
D) an outward shift in the PPF.
C
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A market system is not considered an effective way of controlling self-interest.
Answer the following statement true (T) or false (F)
The feature of the above figure that indicates that the firm is a perfectly competitive firm is the
A) shape of the total cost curve. B) shape of the total revenue curve. C) fact that the total cost and total revenue curves are farthest apart at output is Q2. D) fact that the total cost and total revenue curves cross twice.
In the 20th century, the ratio of the U.S. debt to GDP has largely
A. Fallen to its lowest levels during recessions or depressions. B. Risen in response to wars. C. Been inversely related to the deficit to GDP ratio. D. Fallen during wartime compared with prewar levels.
Which of the following is NOT a valuable role of government in a free market society?
A. To enhance rent-seeking activities. B. To reduce market power. C. To provide public goods. D. To reduce negative externalities.