Sunk costs
a. can only be measured in monetary terms
b. are opportunity costs
c. should influence a person's choice if that person is a marginal decision maker
d. lower the efficiency of production
e. should not be considered when making economic decisions
E
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Refer to Figure 18.3. After trade and specialization begin, the maximum amount of scooters that Livonia can consume is
A) 120. B) 100. C) 80. D) 40.
The decline in the value of the dollar from 1985 to 1988 was beneficial to
A. American tourists travelling to Europe. B. firms importing goods into America. C. American exporting businesses. D. foreigners holding U.S. government bonds.
An industry is characterized by scale economies, and exists in two countries. Should these two countries engage in trade such that the combined market is supplied by one country's industry, then
A) consumers in both countries would have more varieties and lower prices. B) consumers in both countries would have higher prices and fewer varieties. C) consumers in the importing country only would have higher prices and fewer varieties. D) consumers in the exporting country only would have higher prices and fewer varieties. E) consumers in both countries would have fewer varieties at lower prices.
Starting on a Phillips curve with expected inflation equal to 5% and unemployment at its natural rate, show what happens to unemployment if the Fed tries to reduce inflation, but has no credibility. As time passes and people realize that the inflation rate is now lower, what happens to the short-run Phillips curve?
What will be an ideal response?