Assume that you have won a prize of $10,000. Make a list of how you would spend and save the money, from most important to least important.
What will be an ideal response?
ANS:
The answer will depend on the judgment of the individual student. But in making the list, the student should remember that there is no more than $10,000 to spend.
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An increase in production of one good will have zero opportunity cost only if the economy initially existed at a point inside the production possibilities curve
a. True b. False Indicate whether the statement is true or false
If domestic and foreign prices rise by the same relative amount, what will happen to the trade balance?
a. It will rise. b. Nothing will happen. c. It will fall. d. Not enough information is provided to answer the question.
Jan's Dry Cleaning holds $10,000 on a typical day, although only $2,000 is essential for carrying out business. Making a midday deposit is estimated to reduce cash holdings to $8,000 and cost an extra $80 per year in lost production. If, in addition, an armored car service is engaged to pick up cash more frequently for a fee of $120 per year, cash holdings will be further reduced to $6,000 per day. Employing a computerized cash management service for an annual fee of $180 would reduce cash holdings further to $4,000. If any reduction in cash holdings will be invested in government bonds earning 3 percent, then how much money should Jan's hold?
A. $8,000 B. $4,000 C. $6,000 D. $10,000
Suppose a state discovered chemical compounds in their water. The source of these chemicals is the waste discharges of industrial plants in another state. This is an example of a(n):
A. market failure where the market price of the output of these industrial plants exceeds the social cost of producing these goods. B. private cost imposed by the industrial plants of another state. C. externality where the marginal social costs of producing these industrial goods differ from the marginal private costs. D. negative externality that could be corrected with a subsidy to the plants discharging the waste.