The production possibilities table below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy.ProductsProduction Possibilities?ABCDECapital Goods01234Consumer Goods22181370Refer to the table above. What is the opportunity cost of producing the third unit of capital goods?
A. 7 units of consumer goods
B. 6 units of consumer goods
C. 13 units of consumer goods
D. 22 units of consumer goods
Answer: B
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The field of political economy:
A. examines the economic consequences of free markets. B. examines the economic consequences of public sector decision making. C. examines the economic consequences of private sector decision making. D. examines the labor market.
Which of the following is an example of an international externality, in which production (or consumption) activities in one country impose external costs on other countries?
A. Transborder pollution B. Moral hazard C. Persistent dumping D. Free-riding
The federal gasoline tax is assessed on a per-gallon basis and the proceeds are used for highway maintenance and improvements. This tax is consistent with the:
A. single-tax theory of taxation. B. pay-as-you-go ("Paygo") theory of taxation. C. benefits-received principle of taxation. D. ability-to-pay principle of taxation.
When a firm is operating at an output rate at which total revenue equal total costs, this is called
A) its shutdown point. B) its breakeven point. C) a short-run profit. D) a loss.