Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point B to Point D, the opportunity cost of motorcycles, measured in terms of hybrid cars,
A. increases
B. remains constant.
C. initially increases, then decreases.
D. decreases.
Answer: A
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A grower of commercial Christmas trees can raise blue spruce and Douglas fir. Therefore, an increase in the expected market price of Douglas firs tends to
A) reduce the planting of Douglas firs. B) reduce the planting of blue spruce trees. C) increase the cost of planting Douglas firs. D) do none of the above.
If people posing as a vacationers were able to purchase large numbers of airline tickets from the airlines and later resell them to business travelers
A) group price discrimination on the part of airlines would no longer be profitable. B) group price discrimination on the part of airlines would no longer be profit maximizing. C) the airlines would respond by raising further the price charged to business flyers. D) the people reselling would not earn any economic profit.
Under a binding price ceiling, what does the change in producer surplus represent?
A) The gain in surplus for those sellers who are still willing to supply the product at the lower price. B) The loss in surplus associated with those units that used to be produced at the higher price but are no longer produced at the lower price. C) The gain in surplus associated with the excess demand created by the price ceiling policy. D) Both A and B are correct. E) Both A and C are correct.
According to the Net Present Value (NPV) rule, managers choose to invest if
a. The NPV of the project is less than zero b. The NPV of the project is greater than zero c. The NPV of the project is equal to zero d. The NPV of the project is equal to the cost of capital