The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar?
A) 4 machine-made cigars
B) one-quarter of a machine-made cigar
C) $10.00
D) $2.50
Answer: A
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Which of the following is an experiment which tests whether fairness is important in consumer decision making?
A) the preferential treatment game B) the behavioral experiment C) the ultimatum game D) the fair trade principle
Which of the following is correct? Whenever the monetary authority pegs the interest rate,
a. it must be ready to adjust the interest rate on demand. b. the monetary authority must exchange money for bonds on demand. c. it has control of the quantity of money. d. None of the above
An open economy with a government sector is in equilibrium and imports are equal to exports. This means that:
(a) Investment plus taxation is equal to savings plus government spending; (b) Investment plus government spending is equal to savings plus taxation; (c) Investment plus government spending is greater than savings plus taxation; (d) Investment plus taxation is less than savings plus government spending.
Other things equal, the stock of capital inherited by future generations is likely to be smaller when government spending:
A. is financed by taxation. B. increases during a period of recession, rather than prosperity. C. is financed by borrowing. D. is primarily for capital-type goods.