The law of increasing costs means that when an economy increases the production of one item:
a) the opportunity cost goes up
b) the actual cost of making the item goes down
c) the actual cost goes up but the opportunity cost goes down
d) the production costs will increase alot
Ans: a) the opportunity cost goes up
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Positive economics does not require us to believe that actual happiness is the same as utility as modeled in economic theory.
Answer the following statement true (T) or false (F)
An underproduction of goods occurs when there is _____
a. free riding b. government production c. holdout d. eminent domain
If a market is initially operating competitively and then the government imposes a price floor above the equilibrium price,
a. there will be more resources will be devoted to the production of this product b. quantity demanded will rise c. producer surplus will fall in the short run d. imposition of the floor is probably a positive-sum game e. consumer surplus will fall
At the equilibrium price, quantity demanded is equal to quantity supplied
a. True b. False Indicate whether the statement is true or false