During World War II, Hitler would often order his army to hold a particular town or river “at all costs.” Was this rational? If so, explain. If not, indicate which economic idea it violated.
What will be an ideal response?
The orders were irrational, as they ignored the concept of opportunity cost. More rational orders would have included a calculation of the cost of holding a town or river—the cost in terms of other territories that could then not be held, because the troops and equipment could not be in two places at once.
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The figure above shows the production possibilities frontiers for the United Kingdom and France. If the United Kingdom and France specialize and engage in trade, the United Kingdom will export ________ and France will export ________
A) fish; wheat B) wheat; wheat C) fish; fish D) nothing; nothing E) wheat; fish
Under a system of transferable pollution rights, which of the following firms is most likely to purchase a $500 permit to emit a ton of pollutants in to the atmosphere?
a. a non-polluting firm b. a polluting firm that can reduce emissions at a cost of $500 per ton c. a polluting firm that can reduce emissions at a cost of $200 per ton d. a polluting firm that can reduce emissions at a cost of $600 per ton
Marginal revenue is the addition to a firm's revenue from
a. a $1 change in price. b. a one-unit change in output. c. the sale of inferior output. d. a $1 reduction in marginal cost.
Willingness to pay measures
A) the maximum price a buyer is willing to pay for a product minus the amount the buyer actually pays for it. B) the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept for the good. C) the maximum price that a buyer is willing to pay for a good or service. D) the maximum price a buyer is willing to pay minus the minimum price a seller is willing to accept.