Figure 2-3
shows the production possibilities frontier for a music processing plant that can produce both compact disks and cassettes. The opportunity cost of moving from point A to point E is
a.
zero
b.
30 cassettes
c.
180 compact disks
d.
cannot be determined because point E is unattainable under current technology and resources
e.
80 cassettes
d
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In the table above, what price level belongs in space D?
A) 125 B) 130 C) 140 D) 145
Appendix: Revenue equivalence theorem refers to equal seller revenue in which of the following pairs:
a. sealed bid auctions and English auctions b. second highest wins and pays auctions and Dutch auctions c. English highest wins and pays auctions and sealed bid Dutch auctions d. highest wins and pays auctions and second highest wins and pay auctions
During economic contractions, transfer payments such as welfare benefits _____. a. automatically increase, reducing income further
b. automatically increase, reducing the impact of the contraction on disposable income. c. automatically decrease because tax revenues fall and welfare benefits are no longer affordable. d. are decreased as a discretionary move on the part of Congress to stimulate expansion. e. are increased as a discretionary move on the part of Congress to cushion recipients against the negative effects of economic contraction.
Social costs are:
A. private costs plus external costs. B. network costs minus private costs. C. external costs minus private costs. D. those costs imposed without compensation on someone other than the person who caused them.