What does the expression "There's no such thing as a free lunch" mean?
What will be an ideal response?
The use of resources to produce a good has an opportunity cost because of scarcity.
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Refer to Figure 4-10. Suppose that instead of a price ceiling, the government imposed a price floor of R1. What area represents the deadweight loss after the imposition of the price floor?
A) J + H B) C + E + J + H C) C + E D) G + H
Rick buys a 1966 Mustang for $3,000 . planning to restore and sell the car. He goes on to spend $9,000 restoring the car. At this point he can sell the car for $10,000 . As an alternative, he can spend an additional $3,000 replacing the engine. With a new engine the car would sell for $13,000 . Rick should
a. complete the repairs and sell the car for $13,000. b. sell the car now for $10,000. c. never try such an expensive project again. d. be indifferent between (i) selling the car now and (ii) replacing the engine and then selling it.
Which of the following illustrates double counting?
A) The total market value of the steel used to produce a car and the total market value of the car itself are summed. B) The total market value of tennis rackets and the total market value of tennis balls are summed. C) The total market value of picture frames and the total market value of camera film are summed. D) The total market value of eyeglasses and the total market value of carpet are summed. E) b and c
Economic analysis indicates that
A) no matter what our objectives in life, they are easier to achieve if we have more wealth. B) the desire for more wealth is limited to those who are interested only in their personal welfare. C) wealthy people are happier than those with lots of friends, satisfying marriages, and strong religious convictions. D) single-minded pursuit of money and wealth is the key to happiness.