An external cost, such as the cost generated by pollution, is
A. a cost paid by producers of the product.
B. a cost paid by a third party or by society at large.
C. a cost paid by consumers of the product.
D. not a true opportunity cost of production.
Answer: B
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A speculator who takes a long position in a market buys low and sells high, whereas a speculator who taxes a short position in a market buys high and sells low.
Answer the following statement true (T) or false (F)
Suppose Bev's Bags makes two kinds of handbags-large and small. Bev rents an industrial space where she keeps the fabric, the industrial sewing machine, her measuring board and cutting shears, extra needles, thread and buttons, and labels. Bev can produce three bags an hour, regardless of the size of bag. Which of the following would be considered a fixed cost of this company?
A. The rent Bev pays B. The fabric C. The sewing thread D. None of these would be considered a fixed cost.
In the long run, the chief determinant of exchange rate changes is a change in
A. interest rates. B. real GDP. C. the price of gold. D. price levels.
According to classical theory, full employment in the labor market occurs
A. only when actual expenditures are greater than desired expenditures. B. only when the economy has just experienced a demand shock. C. at a wage rate at which quantity demanded equals quantity supplied. D. whenever aggregate demand is less than aggregate supply.