The term opportunity cost refers to the
A. value of what is gained when a choice is made.
B. difference between the value of what is gained and the value of what is forgone when a choice is made.
C. value of what is forgone when a choice is made.
D. direct costs involved in making a choice.
Answer: C
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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.
Assume the price of gasoline is $2.00 per gallon, and the equilibrium quantity of gasoline is 10 million gallons per day with no tax on gasoline. Starting from this initial situation, which of the following scenarios would result in the largest deadweight loss?
a. The price elasticity of demand for gasoline is 0.1; the price elasticity of supply for gasoline is 0.6; and the gasoline tax amounts to $0.20 per gallon. b. The price elasticity of demand for gasoline is 0.1; the price elasticity of supply for gasoline is 0.4; and the gasoline tax amounts to $0.20 per gallon. c. The price elasticity of demand for gasoline is 0.2; the price elasticity of supply for gasoline is 0.6; and the gasoline tax amounts to $0.30 per gallon. d. There is insufficient information to make this determination.
Should regular saving be an item in your personal budget?
A) No, it is not necessary to save as long as you have the borrowing power to deal with unexpected expenditures. B) Yes, regular saving for both unexpected emergency expenses and big-ticket items like the down payment for a house will increase your financial security. C) Yes, but when you are young, it only makes sense to save for big-ticket items like a car or a European vacation. D) No, you can always start saving in the future when you have a larger income.
Which of the following schools of economic thought would be against balancing the budget during a recession?
A. The classical school B. Keynesians C. Monetarists D. Supply side economics