Opportunity cost is
A) the combined value of all the alternatives not selected.
B) the same thing as the money price of a good.
C) the value of the next best alternative which was given up.
D) based on the intrinsic value of the good itself.
Answer: C
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If the opportunity cost of producing extra units of one good (expressed in terms of the amount of another good given up) remains constant, then the shape of the production possibilities frontier is
A. a vertical line. B. an upward-sloping line. C. a straight horizontal line. D. a straight downward-sloping line.
Which of the following is not a possible solution to the holdout problem?
a. eminent domain b. contingency contracts c. Dutch auction d. hiding your intentions
For a perfectly competitive firm, in the short run, which of the following statements is true?
a. A price above minimum average variable cost, but below average total cost will produce an economic profit. b. A price below minimum average variable cost will cause the firm to shut down. c. Marginal cost is parallel to the axis showing quantity of output. d. Price is always greater than marginal revenue. e. Every firm contributes a significant amount to the total market output.
An increase in the price level means that
A. the value of the dollar has increased. B. monetary policy has been contractionary. C. long-run aggregate supply has increased. D. the purchasing power of money has fallen.