An economy has two workers, Paula and Ricardo. Every day they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the opportunity cost for Ricardo to produce one shirt?
A. 2 computers
B. ¼ computer
C. 4 computers
D. ½ computer
Answer: D
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Suppose a firm's stock valuation is worth three times its outstanding debt. The firm's stock earns an annual return of 6 percent and pays 8 percent on the outstanding debt. What is the firm's company cost of capital?
A) 4.5 percent B) 6 percent C) 6.5 percent D) 8 percent
Suppose that Industry X has two firms with equal market shares, and Industry Y has three firms with 65 percent, 30 percent, and 5 percent market shares, respectively. Which of the following is TRUE?
A) The HHI for Industry X is 50 higher than the HHI for Industry Y. B) The HHI for Industry X is 150 lower than the HHI for Industry Y. C) The HHI for Industry X is 100 higher than the HHI for Industry Y. D) The HHI is the same between Industry X and Industry Y.
Most economists believe that a tradeoff between inflation and unemployment exists
a. only in the short run. b. only in the long run. c. in both the short and long run. d. in neither the short nor long run.
Inflation will
A) increase aggregate demand. B) increase the quantity of real GDP demanded. C) decrease aggregate demand. D) decrease the quantity of real GDP demanded.