Why might the money price for something be higher than the opportunity cost? Why might it be lower? Give an example of each to illustrate your answer


Money price can be higher than opportunity cost if the good or service has no alternative use. An example might be hiring unemployed persons to perform labor. Because the next best use of the labor has zero monetary value, the money cost of the task is above the opportunity cost. The opportunity cost can be higher than the money price if one ignores implicit costs, e.g., time, in computing cost. One example is the opportunity cost of attending college.

Economics

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Economists refer to the general problem of ________ as a principal-agent relationshi

A) moral hazard B) adverse selection C) negative externalities D) pecuniary externalities

Economics

Suppose the cross-price elasticity of demand between peanut butter and jelly is -2.50 . This implies that a 20 percent increase in the price of peanut butter will cause the quantity of jelly purchased to

a. fall by 8 percent. b. fall by 50 percent. c. rise by 8 percent. d. rise by 50 percent.

Economics

The quantity supplied of a good is the amount that

a. buyers are willing and able to purchase. b. sellers are able to produce. c. buyers and sellers agree will be brought to market. d. sellers are willing and able to sell.

Economics

One way the government can boost the economy out of a recession is:

A. with public announcements telling the public to save their money. B. by increasing government spending. C. by setting price ceilings on most goods so people can afford them. D. None of these will help an economy in recession.

Economics