An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Jen to produce one radio?
A. 1/5 TV
B. 5 TVs
C. 1/10 TV
D. 10 TVs
Answer: A
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Consumption spending includes spending on:
A. durables, nondurables, and services. B. goods and services by federal, state, and local governments. C. capital goods, residential housing, and changes in inventories. D. stocks, bonds, and other financial instruments.
Why would it be a mistake to treat opportunity costs and explicit monetary costs as identical?
A. Because sometimes the market does not function well. B. Because opportunity costs are different for different goods. C. Because there are trade-offs involved in any decision. D. Because of existence of efficient markets.
The Walt Disney Company is in a position to use a two-part tariff policy in setting prices for admission and rides at Disney World. If this strategy resulted in maximum profit, Disney would convert all consumer surplus into profit
Which of the following explains why Disney does not maximize its profits from admission and rides? A) Disney purposely charges less than the profit-maximizing price for admission to Disney World because it does not want to risk alienating its customers. B) To maximize its profits, Disney would have to know the demand curves of each of its customers. Since this is not possible, Disney is not able to convert all consumer surplus into profit. C) Disney purposely charges less than the profit-maximizing price for admission to Disney World in order to earn more profit from sales of food, lodging, and other related services. D) Disney does not charge the profit-maximizing price for admission because it wants to keep admission affordable for children who will be more likely to visit Disney World when they become parents.
Which of the following is a characteristic of entrepreneurship?
a. the ability to navigate bodies of water b. it is produced using physical capital c. it is used up quickly in the production process d. it is a pre-existing resource like land e. it is associated with risk taking and innovation