Marginal analysis involves undertaking an activity
A) until its marginal costs start declining.
B) only when its marginal benefits are positive.
C) until its marginal benefits equal marginal costs.
D) only if its marginal costs are greater than its marginal benefits.
Answer: C
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As an economy increasingly specializes in producing one good, the opportunity cost of that good increases. The opportunity cost increases because
A) not all goods are equally valuable. B) as more of a good is produced, the profit from its production must rise. C) resources are not equally productive in all activities. D) what must be paid to resources increases. E) human wants are virtually unlimited.
To increase gas mileage, automobile manufacturers make cars small and light. Large cars absorb more of the impact of an accident than small cars but yield lower gas mileage
These facts suggest that a positive relationship exists between safety and gas mileage. Indicate whether the statement is true or false
Steven lives in a big city where there is a shortage of parking spots. He has a parking spot in his driveway where he parks his car. Which of the following statements is most correct?
A. Steven has a lower opportunity cost of owning a car than his neighbor, who must rent a parking spot. B. The opportunity cost of using the spot is zero, because Steven owns the house. C. The opportunity cost of using the parking spot is the price he could charge someone else for using the spot. D. The opportunity cost depends on how much Steven's mortgage payment is.
In an inflationary atmosphere that everyone anticipates will persist, lenders will
A) desire a lower nominal interest rate to increase the real rate. B) desire a higher nominal interest rate to protect against the inflation. C) tend to see the real rate of interest increase, particularly if the inflation is unforeseen. D) have the real rate of interest guaranteed by the Federal Reserve Board.