Opportunity cost is best defined as
A). the opportunity to earn a profit that is greater than the one currently being made.
B). the amount that is given up when choosing an activity that is not as good as the next best alternative.
C). the amount given up when choosing one activity over all other alternatives.
D). the amount given up when choosing one activity over the next best alternative.
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When price is above the equilibrium level, competitive price cutting will continue as long as quantity supplied exceeds quantity demanded.
Answer the following statement true (T) or false (F)
Refer to Figure 16-2. Suppose Plato Playhouse price discriminates. Which of the following statements is true?
A) By charging two different prices, the theatre company has redistributed some profits from those who can pay higher prices to those who cannot, thereby increasing economic efficiency. B) By charging two different prices, the theatre company essentially allows those willing to pay higher prices to subsidize those who are not. C) Plato Playhouse will earn higher profits if it charges a single price—an average of the two prices— instead of charging two different prices to the two different groups of customers. D) By charging two different prices, the theatre company has redistributed some profits from those who can pay higher prices to those who cannot, thereby improving equity.
The vertical distance between the total cost curve and the total variable cost curve reflects
a. profit per unit. b. total fixed cost. c. marginal cost. d. the principle of diminishing marginal returns.
Suppose a tax on buyers has been imposed in the graph shown. How much are buyers being taxed on each unit sold?
A. $4
B. $8
C. $12
D. $16