The principle that individuals and firms pick the activity level where the incremental benefit of that activity equals the incremental cost of that activity is known as the:
A. marginal principle.
B. principle of opportunity cost.
C. principle of diminishing returns.
D. spillover principle.
Answer: A
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A social system could eliminate profits and losses if it could
A) eliminate greed and selfishness. B) eliminate uncertainty. C) fix all prices to reflect opportunity costs. D) fix all prices to reflect the value of the labor embodied in goods. E) tax all receipts above cost and redistribute them to firms unable to cover all their costs.
Refer to Figure 2-6. If the economy is currently producing at point D, what is the opportunity cost of moving to point B?
A) 60 thousand spoons B) 0 forks C) 16 thousand spoons D) 46 thousand forks
The only reason that exchange rates change is because overall price levels in the countries change
Indicate whether the statement is true or false
Based on the table "Real and Nominal GDP," if year one is the base year, then the GDP deflator for year three is ________
A) 165 B) 139.8 C) 85.8 D) 133.6 E) 114.6