Consider the production possibilities frontier in the figure shown. As more and more cigars are produced the opportunity cost of producing more cigars:
A. decreases.
B. increases.
C. stays the same.
D. decreases then increases.
Answer: B
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In monopolistic competition, the entry of new firms
A) shifts existing firms' demand curves rightward. B) shifts existing firms' demand curves leftward. C) only results in a movement along the existing firms' demand curves. D) has no effect on the existing firms' demand curves. E) shifts existing firms' supply curves rightward.
James insured his car with a renowned insurance company that checked his driving skills and verified his accident records before insuring his car. After paying two premiums for this insurance, James took to drinking and driving. This action of James is likely to create:
a. an economic loss. b. a positive externality. c. an economic bad. d. a moral hazard. e. diseconomies of scale.
Banks are not allowed to hold reserves in excess of those required by law
a. True b. False
The success of self-employed entrepreneurs depends on
A) a strong need to stay with tried and true ways of doing things. B) high personal consumption rates. C) an ability to discover and act on valuable opportunities overlooked by others. D) the government and its investment in research and development.