The law of increasing opportunity costs indicates that:
A. the sum of all costs cannot rise above the market price of a product.
B. to produce more of one good, society must sacrifice larger and larger amounts of alternative goods.
C. resources are perfectly mobile except for transportation costs.
D. if the prices of all the resources involved in the production of goods increase, the cost of producing those goods will increase at the same rate.
Answer: B
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Suppose you collect stamps and coins for the sheer fun of it. Currently, your collection contains both. For purposes of this problem, suppose that stamps all sell for one price and coins all sell for another, and both are normal goods. a. Begin by illustrating your current budget constraint (with stamps on the horizontal and coins on the vertical) as well as the bundle A you currently own. Assume that you have done the best you can given your circumstances. b. The stamp industry has recently marketed its product as a safe way of investing and insuring against inflation. As a result, the price of stamps has been driven up since you chose your current bundle. Show how this changes your budget constraint given that you can buy and sell both stamps and coins --- and assuming you have no
additional funds to spend on your collections. c. Are you happy about the stamp industry's marketing campaign? In what way will you adjust your collection? d. After a while (and after you have made your desired adjustments), it turns out that the marketing campaign only produced a temporary "bubble" in the stamp market --- and prices fall back to what they were before. Are you happy when the bubble bursts? Will you have more or fewer coins and stamps than you had before the marketing campaign started? e. True or False: For collectors that collect to satisfy their passion (rather than as an investment strategy), volatility in prices is good. What will be an ideal response?
The U.S. Bureau of Labor Statistics predicts that 13 of the 20 fastest growing occupations over the next ten years will be in
A) construction. B) the travel and leisure industry. C) education. D) the medical field.
Customer discrimination occurs when
A) a firm pays workers different wages based on irrelevant factors. B) workers refuse to serve customers of a different race. C) customers refuse to buy products produced by a racially diverse workforce. D) customers refuse to buy products they believe to be of poor quality.
Economics is the study of
a. how to get rich by playing the stock market b. the best ways to reduce people's wants, given the scarcity of resources c. how rational government officials determine what goods should be produced d. money and why it is good e. how people use limited resources to try to satisfy unlimited wants