Refer to the information provided in Figure 20.1 below to answer the question(s) that follow.
Figure 20.1Refer to Figure 20.1. The opportunity cost of producing a bushel of soybeans in Canada is
A. half a bushel of alfalfa.
B. 1 bushel of alfalfa.
C. 2 bushels of alfalfa.
D. zero.
Answer: B
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Opponents of rule-determined policies might point out that ________
A) markets self-correct quickly so rules become obsolete B) unforeseen changes in the structure of the economy may make a rule obsolete C) policies that kick in at the wrong time may lead to undesirable results D) all of the above E) none of the above
A negative externality or spillover cost (additional social cost) occurs when
A. the price of the good exceeds the marginal cost of producing it. B. the total cost of producing a good exceeds the costs borne by the producer. C. firms fail to achieve allocative efficiency. D. firms fail to achieve productive efficiency.
By convention, there are two major divisions of economics, called:
A. microeconomics and macroeconomics. B. rational economics and irrational economics. C. reservation price and opportunity cost. D. marginal benefit and marginal cost.
Which of the following statements is NOT true of external benefits?
A. External benefits lead to an underallocation of resources to the production of the good that has the external benefit. B. External benefits are a good thing for the allocation of resources because people are getting something at no cost. C. External benefits lead to too few of the goods that have the external benefit being produced. D. External benefits lead to a price in the market that is too high.