Objects in and of themselves have no costs. Lunches are an object, so they presumably have no cost. Yet we often hear economists say, "There is no such thing as a free lunch." Are economists being inconsistent?
A) It is impossible to tell.
B) Yes, if the statement implies lunch actually has a cost.
C) No, if the statement implies the decision to offer lunches free of charge entails the sacrifice of scarce resources, which could have served other useful purposes.
D) Both B and C are true.
D
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There will be no deadweight loss if the marginal benefit to consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized
Indicate whether the statement is true or false
Which of the following is not assumed to be constant along a money demand curve?
a. The price level b. The interest rate c. Real GDP d. Nominal GDP e. Individual's tastes and preferences
Banks normally hold few excess reserves because this practice is:
a. subject to an excess reserves tax. b. not profitable. c. against Fed policy. d. illegal.
Which of the following is true of a price floor?
a. A price floor allows supply and demand to function effectively. b. A price floor is set such that the price is not allowed to increase above a certain level. c. A price floor is beneficial to buyers in a market. d. A price floor usually creates a shortage of a good in a market. e. A price floor is set such that the price is not allowed to decrease below a certain level.