Chelsea wants to start her own Christmas ornament business. She can purchase a suitable factory that costs $100,000 . Chelsea currently has $150,000 in the bank earning 3 percent interest per year. Suppose Chelsea purchases the factory using her own money. What is Chelsea's annual implicit opportunity cost of purchasing the factory?
a. $2,000
b. $3,000
c. $4,500
d. $5,000
b
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Use the above table. Assuming constant opportunity costs, the opportunity cost of producing a pound of beef in France is
A) 2 gallons of wine. B) 3 gallons of wine. C) 0.5 gallons of wine. D) 0.33 gallons of wine.
If the tax rate fell, holding municipal bonds would be less desirable so the interest rates on them would fall
a. True b. False Indicate whether the statement is true or false
When the money supply is expanding rapidly and the general level of prices increasing sharply, economic growth is
A) slowed by the resulting unpredictability of the future level of prices. B) enhanced because profits are higher so that capital investment is greater. C) enhanced because existing debt is reduced in value, so people are willing to buy more goods. D) enhanced as economic activity grows more rapidly.
"Effective demand" represents which of the following?
A) money demand B) demand for exports C) domestic demand D) the demand for labor E) aggregate demand