Steven lives in a big city where there is a shortage of parking spots. He has a parking spot in his driveway where he parks his car. Which of the following statements is most correct?
A. Steven has a lower opportunity cost of owning a car than his neighbor, who must rent a parking spot.
B. The opportunity cost of using the spot is zero, because Steven owns the house.
C. The opportunity cost of using the parking spot is the price he could charge someone else for using the spot.
D. The opportunity cost depends on how much Steven's mortgage payment is.
Answer: C
You might also like to view...
The table above gives the total revenue and total cost for a perfectly competitive firm producing chocolate chip cookies. If the firm is producing 1 pound of cookies, to maximize its profit it will
A) increase its output. B) decrease its output. C) continue producing 1 pound of cookies. D) shut down.
Some economists believe that the economy benefits from firms having market power. Which of the following is an argument that has been made to support this position?
A) Large firms are better able than small firms to spend funds on research and development required to develop new products. B) Research has shown that the deadweight loss from monopolies is a small percentage of the value of production in the United States. C) Competition is very rare in the U.S. economy and few new products are produced by smaller, competitive firms. D) Large firms can afford to lobby the U.S. government in order to impose restrictions on imports and reduce the outsourcing of jobs to other countries.
Central bank lending to bail out troubled firms is known as ________, while allowing troubled firms to conceal the true value of their assets is called ________
A) crony capitalism; larceny B) liquidity provision; regulatory forbearance C) securitization; nonconventional monetary policy D) subprime lending; regulatory arbitrage
The argument that suggests that regulators balance the interests of firms, consumers, and legislators is called
A) the capture hypothesis. B) the creative response theory. C) the share-the-gains, share-the-pains theory. D) the theory of optimal regulation.