The owner of a scenic waterfall is trying to decide whether to rent the site to a manufacturing firm as an industrial power source or to rent it to a recreational association, which would turn the site into a park and campground
Which of the following statements is true? A) An increase in the price of fossil fuels will increase the cost of renting it to the recreation association.
B) Social welfare is maximized when the owner rents to the higher bidder.
C) The cost to the owner of renting to one or the other depends entirely upon the owner's preferences between economic growth and recreational facilities.
D) The owner can choose without regard to cost because the site is a free natural resource.
E) The owner can choose without regard to cost insofar as the waterfall is privately owned.
A
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The figure illustrates the market for hot dogs on Big Foot Island. The producer surplus is ________
A) $240 an hour B) $180 an hour C) $1.20 a hot dog D) $60 an hour
Mike wants to open his own repair shop, and is considering using his savings of $30,000 to get it started. He is currently earning 3 percent interest on his savings. His friend Bob calls him and asks to borrow $30,000 to start up a bagel shop; Bob offers to pay him 5 percent interest if he loans him the money. If Mike were to use the money to open his own repair shop, how can he accurately account for his costs?
A. Mike must consider the $900 in forgone interest on his savings as an implicit cost. B. Mike must consider the $1,500 in forgone interest from loaning the money to Bob as an implicit cost. C. Mike must consider the $900 in forgone interest on his savings as an explicit cost. D. Mike must consider the $1,500 in forgone interest from loaning the money to Bob as an explicit cost.
An increase in the consumption of a good resulting from a reduction in price that makes the good cheaper in relation to other goods is called the:
a. substitution effect. b. income effect. c. real balance effect. d. inelasticity effect.
Arbitrage keeps markets from reaching equilibrium
Indicate whether the statement is true or false