What is the opportunity cost of a decision?
What will be an ideal response?
Answer: the most desirable alternative given up for the decision.
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In the circular flow of economic activity
A) aggregate expenditure measures the dollar value of purchases of factors. B) aggregate expenditure measures the dollar value of purchases of final goods and services. C) aggregate income measures the dollar value of labor resources only. D) aggregate expenditure is measured as it moves through the financial markets.
A decrease in the demand for dollars on the foreign exchange market, all else equal, will result in:
A) appreciation of the U.S. dollar and depreciation of the foreign currency. B) appreciation of the U.S. dollar and appreciation of the foreign currency. C) depreciation of the U.S. dollar and depreciation of the foreign currency. D) depreciation of the U.S. dollar and appreciation of the foreign currency.
An insurance company finds that it insured an adverse selection of largely ill patients. It is forced to increase insurance premiums to reduce losses. How does this aggravate the adverse selection problem?
Allocative inefficiency happens in a monopoly because at the profit-maximizing output level:
A. P > ATC B. P > MR C. P > MC D. P > AVC