In Figure 1.5, at which of the following points would the opportunity cost of producing more doughnuts be greatest?
A. C.
B. F.
C. A.
D. E.
Answer: A
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Necessities, such as food and shelter, are product purchases that consumers are sensitive to, so the demand is elastic for these goods.
Answer the following statement true (T) or false (F)
Pure economic rent is a payment to a resource that
A) has a high opportunity cost. B) has a perfectly inelastic supply. C) has a negative opportunity cost. D) has a perfectly elastic demand.
Which of the following situations can lead to a winner's curse?
a. A bid which is won by multiple bidders but fails to cover the expectations of the seller. b. A win which makes a player over-enthusiastic about further gambles. c. An overoptimistic bid which helps the bidder to win but fails to cover his costs. d. A win which makes the player risk-averse toward future gambles.
The short-run market supply curve in a perfectly competitive industry
a. shows the total quantity supplied by all firms at each possible price b. is perfectly inelastic at the market price c. is perfectly elastic at the market price d. shows how much output each individual firm will supply at various possible prices e. is usually downward sloping