The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar?
A) $10.00 B) 4 machine-made cigars
C) $2.50 D) one-quarter of a machine-made cigar
B
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Tom and Jerry have two tasks to do all day: makedishes and build fences. If Tom spends all day makingdishes, he will have make 16 dishes. If he instead devotes his day to building fences, Tom will build 4 fences. If Jerry spends his day makingdishes, he will make 14 dishes; if he spends the day building fences, he will build 7 fences. After looking at the production possibilities for both Tom and Jerry, we can conclude that:
A. Tom has the comparative advantage in dish production. B. Jerry has the comparative advantage in dish production. C. Tom has the comparative advantage in fence production. D. No comparative advantage exists.
The public assistance program that economists believe can promote economic equality at the least cost in economic efficiency is
A. Aid to Families with Dependent Children (AFDC). B. a negative income tax (NIT). C. food stamps. D. Medicaid.
The majority of federal expenditures is spent on
A. Public sector purchases of goods and services. B. National Defense. C. Private sector purchases of goods and services. D. Income transfers.
The goal of product differentiation and advertising in monopolistic competition is to make:
A. the firm allocatively efficient even if it is not productively efficient. B. price more of a factor and product differences less of a factor in consumer purchases. C. price less of a factor and product differences more of a factor in consumer purchases. D. the firm productively efficient even if it is not allocatively efficient.