Sherri has decided that with the two hours in between classes she can do one of 3 things. She has ranked her choices, from highest to lowest as, (1) chat with her friends, (2) study history or (3) take a nap. The opportunity cost of chatting with her friends is
A. the combined value of studying history and taking a nap.
B. the value of studying history, the next best use of time.
C. zero since she does not pay her friends to talk to her.
D. the value of chatting with her friends.
Answer: B
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The ability to produce a good at a lower opportunity cost than another producer is called
A) absolute advantage. B) comparative advantage. C) specialization. D) protectionism.
When prices are allowed to fluctuate after a crisis, such as Hurricane Katrina, the high prices
A) provide information to suppliers about where goods and services are most highly desired. B) are evidence of price gouging. C) justify government intervention. D) All of the above.
The price elasticity of demand is calculated as the absolute value of the
A) percentage change in quantity demanded divided by the percentage change in price. B) percentage change in price divided by the percentage change in quantity demanded. C) change in quantity demanded divided by the change in price. D) change in price divided by the change in quantity demanded.
Under a fixed exchange rate system, a currency devaluation ________ the nominal exchange rate and will ________ net exports
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease