The extra costs incurred to avoid holding cash when there is inflation are called the:
A. shoe leather costs.
B. external costs.
C. consumer price index costs.
D. average costs of inflation.
Answer: A
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When the government steps in to help determine prices, it is called
a. price ceilings. b. price floors. c. equilibrium prices. d. price control.
For all firms, the additional revenue collected from the sale of one additional unit of output is termed:
A. marginal profit. B. average revenue. C. marginal revenue. D. price.
Answer the following questions true (T) or false (F)
1. In order to construct the budget line, one only needs to know the prices of the goods in question. 2. Normal goods are goods for which consumption falls (rises) when income increases (decreases). 3. The consumer is at equilibrium when the marginal rate of substitution is equal to the slope of the budget line.
The law of increasing additional cost occurs when
A) there are always shortages in some goods. B) technology is not used. C) resources are not perfectly adaptable for alternative uses. D) there are always alternatives and it is costly to figure out which alternative is best.