Three of the four following questions are indicative of the three fundamental economic questions. Leaving out the irrelevant question, rearrange the three relevant questions in the order an economy must answer them.
- Should electricity be produced from oil, solar, or nuclear power?
- Should corn be produced in the North or in the South?
- Who drives a Mercedes?
- Should more hybrid cars and fewer SUVs be produced?
A. 1. Should more hybrid cars and fewer SUVs be produced? 2. Should corn be produced in the North or in the South? 3. Should electricity be produced from oil, solar, or nuclear power?
B. 1. Who drives a Mercedes? 2. Should more hybrid cars and fewer SUVs be produced? 3. Should corn be produced in the North or in the South?
C. 1. Should more hybrid cars and fewer SUVs be produced? 2. Should electricity be produced from oil, solar, or nuclear power? 3. Who drives a Mercedes?
D. 1. Should electricity be produced from oil, solar, or nuclear power? 2. Should more hybrid cars and fewer SUVs be produced? 3. Should corn be produced in the North or in the South?
Answer: C
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For a given market demand curve, if the market clearing price increases, then the amount of producer surplus will
A) decrease. B) increase. C) become negative. D) none of the above due to insufficient information.
An industry in which an increase in output leads to a reduction in long-run per-unit costs is a(n)
A) increasing-cost industry. B) constant-cost industry. C) break-even cost industry. D) decreasing-cost industry.
If the average annual growth rate in real Gross Domestic Product (GDP) for a nation during the last decade was 4 percent per year and the average annual population growth rate was 3 percent per year during the same period, then the average annual growth rate of per capita GDP was
A. -1 percent. B. 1 percent. C. 0 percent. D. 7 percent.
Fixed costs
A. do not exist in the long run. B. are zero if a firm produces no output. C. depend on a firm's level of output. D. are total costs minus average variable costs.