Greg, a landscaper, is planning on opening his own landscaping company. He currently earns $40,000 per year working for his uncle but he will need to quit that job
He plans to use $10,000 in savings to pay for the equipment he needs, though even after use he could sell the equipment for what he paid, $10,000. The current interest rate on savings is 5 percent. What is the total opportunity cost incurred by Greg in running his own business? A) $10,000
B) $40,500
C) $40,000
D) $50,000
B
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Answer the following statement(s) true (T) or false (F)
1 A farmer has a comparative advantage at growing wheat if his cost of growing wheat is smaller than his cost of growing any other crop. 2. A farmer has a comparative advantage at growing wheat if his cost of growing wheat is less than the cost of another farmer growing wheat. 3. By definition, someone who has an absolute advantage must also have a comparative advantage. 4. If there are only two activities on which a person can work, and there are two people to do the work, then it is impossible for one person to have a comparative advantage in both activities. 5. By definition, someone who has a comparative advantage in producing soft drinks must also have an absolute advantage in producing soft drinks.
You are the manager of a monopoly that faces a demand curve described by P = 63 ? 5Q. Your costs are C = 10 + 3Q. The profit-maximizing output for your firm is:
A. 6. B. 5. C. 4. D. 3.
In the circular flow diagram everyone's expenditure is someone else's cost.
Answer the following statement true (T) or false (F)
the negative GDP gap were equal to 4% of the potential GDP, Okun's law suggests that the actual unemployment rate would exceed the natural rate of unemployment by:
A. One percentage point B. Two percentage points C. Three percentage points D. Four percentage points