Briefly explain the reason for the Law of Increasing Opportunity Cost.
What will be an ideal response?
The basic reason for the law of increasing opportunity cost is that some resources and skills cannot be easily adapted from their current uses to alternative uses. The more you produce of one good, the more you are forced to employ inputs that are relatively more suitable for producing other goods.
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Under Bretton Woods,
A) any foreign country cannot devalue its currency against the dollar in conditions of "fundamental disequilibrium." B) any foreign country could devalue its currency against the dollar in conditions of "fundamental disequilibrium," but the system's rules did not give the United States the option of devaluing against foreign currencies. C) any foreign country could devalue its currency against the dollar in conditions of "fundamental disequilibrium," and the system's rules did give the United States the same option of devaluing against foreign currencies. D) the U.S. could devalue its currency against the foreign currencies in conditions of "fundamental disequilibrium." E) any foreign country can revalue its currency against the dollar in conditions of "fundamental disequilibrium."
A bank allows us to diversify risk because it has a:
A. big pool of borrowers and savers, so the risk of repayment is spread among many. B. small amount of borrowers, but many savers, so it can combine savings to make larger loans. C. small amount of borrowers and savers, so it can connect the optimal saver to the best-matched borrower. D. big pool of borrowers, but not many savers, so it can choose the riskiest person to borrow from.
After a price ceiling of $8 is placed on the market in the graph shown, which area represents total surplus?
A. A + B + C + D + E B. A + B + C + D + E + F + G C. A + C + E D. A + B + C + D + E + F
If a firm produces nothing, which of the following costs will be zero?
a. total cost b. fixed cost c. opportunity cost d. variable cost