Define opportunity cost. A student who has just graduated from college has three job offers: the first job pays him $35,000 a year, the second job pays him $23,000 a year, and the third one pays him $15,000 a year
What is the student's opportunity cost of taking the first job?
Opportunity cost is the best alternative use of a resource. It is what an economic agent is giving up when he chooses a particular option. If the individual decides to take the first job; he will earn $35,000 a year. The opportunity cost of taking this job is the next best offer that he could have taken up. Therefore, the opportunity cost of the first job is $23,000 a year.
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Refer to Figure 15-17. An economics professor argues: "I think the course should be priced so as to achieve economic efficiency." How much profit (or loss) will the college make on the course if it charges this price?
A) -$2,592,000 B) -$1,080,000 C) $0 D) $450,000
If real GDP is $22 trillion, consumption is $14 trillion, planned investment is $4 trillion, government purchases are $4 trillion, net exports are -$1 trillion, then the unintended inventory adjustment is:
a. -$2 trillion. b. -$1 trillion. c. $1 trillion. d. $2 trillion.
In the long run, most economists agree that a permanent increase in government spending leads to
A) no decrease in private spending. B) a decrease in private spending by less than the amount that government spending increased. C) a decrease in private spending by the same amount that government spending increased. D) a decrease in private spending by more than the amount that government spending increased.
If a society is producing at a point along its production possibility frontier, then the society
A. is overallocating resources so efficiency is indeterminate. B. is fully employing its resources so it must be achieving output efficiency. C. is fully employing its resources, but not necessarily achieving output efficiency. D. is underallocating resources so it must be inefficient.