Christopher just won tickets to see an NFL football game. His coworker offers to pay him $300 for them, but Christopher decides to use them, even though he would never pay $300 for them himself. Christopher's willingness to consume $300 worth of tickets that he doesn't value at $300 is attributed to:
A. the implicit cost of ownership.
B. his refusal to ignore the sunk cost of the tickets.
C. the high transactions costs involved in selling the tickets.
D. None of these is correct.
Answer: A
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Suppose the required reserve ratio is 3 percent, and currency and reserves total $10 million. The maximum money supply that can be supported is:
a. $13 million. b. $30 million. c. $97 million. d. $333.3 million.
When the price level falls
a. the interest rate rises, so the quantity of goods and services demand rises. b. the interest rate rises, so the quantity of goods and services demand falls. c. the interest rate falls, so the quantity of goods and services demand rises. d. the interest rate falls, so the quantity of goods and services demand falls.
Refer to the provided supply and demand graph for a product. In the graph, line S is the current supply of this product, while line S1 is the optimal supply from the society's perspective. This figure suggests that there is (are)
A. external costs in the production of this product. B. positive externalities from producing the product. C. external benefits from the production of this product. D. currently an underallocation of resources toward producing this product.
Suppose milk and cereal are compliments and the demand for milk is Qdm = 40 - 6Pm - 2Pc, where Qdm stands for millions of gallons of milk demanded, Pm stands for the price of milk and Pc stands for the price of cereal. The supply of milk is Qsm = 6Pm - 8, where Qsm stands for millions of gallons of milk supplied. The demand and supply of cereal are Qdc = 90 - 5Pc - Pm and Qsc = 5Pc - 10, respectively, where Qdc stands for millions of boxes of cereal demanded and Qsc stands for millions of boxes of cereal supplied. Suppose the government imposes a $2.00 per gallon tax on milk. The formula for the market-clearing curve for milk after the tax is:
A. Pm = 4 - (Pc/6). B. Pm = 5 - (Pc/6). C. Pm = 5 + (Pc/6). D. Pm = 2 - (Pc/6).