Sadie is getting ready to go to work where she earns $70 a day as a day laborer. Her friend Caroline calls her and asks her to go swimming with sharks for the day. Sadie decides to go with her. Sadie's choice implies that her opportunity cost of working is:
A. equal to $70.
B. less than $70.
C. greater than $70.
D. Cannot say without more information.
Answer: C
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All of the following are examples of off-balance sheet activities that generate fee income for banks EXCEPT
A) foreign exchange trades. B) guaranteeing debt securities. C) back-up lines of credit. D) selling negotiable CDs.
Liquidity provision and asset purchase may not be enough to stimulate the economy unless the these policy actions are able to
A) lower the real interest rate for investments. B) lower the short-term real interest rate. C) raise the policy rate above zero. D) lower the policy rate.
What is the principal difference between the neo-Keynesian and rational expectations theories concerning stabilization policy?
You have driven 800 miles on a vacation and then you notice that you are only 15 miles from an attraction you hadn't known about, but would really like to see. In computing the opportunity cost of visiting this attraction you had not planned to visit, you should include
a. both the cost of driving the first 800 miles and the next 15 miles. b. the cost of driving the first 800 miles, but not the cost of driving the next 15 miles. c. the cost of driving the next 15 miles, but not the cost of driving the first 800 miles. d. neither the cost of driving the first 800 miles nor the cost of driving the next 15 miles.