Some college students have claimed that because their incomes will be higher as a result of attending college, there is no opportunity cost of attending college. Do you agree? Explain.
What will be an ideal response?
No. Although estimates of the rate of return on a college education are fairly high, this does not eliminate the opportunity cost of attending. Besides the explicit (out-of-pocket) costs of tuition, books, etc., there is the implicit cost of forgone income during college years. It should be noted, however, that if students have very low value in the labor marketplace, then the implicit cost would be low—but not zero.
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Specialization in production
A. raises productivity. B. requires money. C. stimulates exchange. D. All of the responses are correct.
On January 1, 2008, Edward invested $10,000 at 5 percent interest for one year. The CPI on January 1, 2008 stood at 1.60. On January 1, 2009, the CPI was 1.76. The real rate of interest earned by Edward was ________ percent.
A. 5 B. -5 C. 10 D. 0
To correct for the social impact of pollution, the government should levy a per-unit tax
A) that is the same for all polluters regardless of their locations or sizes. B) according to the economic damage of the pollution. C) according to the business activity of the polluter. D) only to those polluters that can afford to pay for the tax.
Firms that are earning zero economic profits are
A. shutting down in the short run. B. breaking even. C. earning less than a normal rate of return. D. shutting down in the long run.