An important and often ignored opportunity cost is the:
a. cost of accounting services
b. cost of missed market opportunities when funds are invested in a firm.
c. cost of interest paid to bondholders by the firm.
d. cost of utilities used by the firm.
b
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According to this Application, some households were willing to take on considerable mortgage debt because
A) they realized the mortgage debt would be more than offset by the tax deductions they could take on the interest paid on their mortgage loans. B) this was a safe investment in light of the rapidly increasing inflation in the economy. C) the government's federal home mortgage insurance program would compensate them for any loss in value they may realize based on the purchase price of their homes. D) they were confident they could make money as the values of their homes increased.
Refer to Figure 4-5. The figure above represents the market for pecans. Assume that this is a competitive market. At a quantity of 4,000 pounds
A) the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low. B) the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high. C) the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low. D) producers should raise the price to $9 in order to sell the quantity demanded of 4,000.
Suppose that Sandy can produce 10 economic reports or make 2 sales calls. Suppose Tim can produce 2 economic reports or make 1 sales call. Which of the following is CORRECT?
A) The opportunity cost for Sandy of producing one economics report is 1/5 of a sales call. B) The opportunity cost for Sandy of producing one sales call is 10 economics reports. C) The opportunity cost for Tim of producing one sales call is 1/2 of an economics report. D) The opportunity cost for Tim of producing one economics report is 2 sales calls.
Slick Shades has a constant marginal cost of production equal to $80 and the distributors have a constant marginal cost of distribution equal to $30. If Slick Shades vertically integrates with the perfectly competitive distributors, the relevant demand curve for the combined firm is the ________ demand curve and the combined firm's marginal cost is equal to ________.
The figure above shows the wholesale demand and marginal revenue curves for Slick Shades Sunglasses, a sunglasses firm with market power. Slick Shades Sunglasses has a constant marginal cost of production and it sells to perfectly competitive independent retail distributors that have a constant marginal cost of distribution.
A) retail; $110
B) retail; $80
C) wholesale; $110
D) wholesale; $80