Suppose a mechanic uses $150,000 of his own money to start a business. The rate of interest he could earn in a savings account is 5 percent, and the rate of interest he could earn by investing in bonds is 8 percent. What is the opportunity cost of capital when the mechanic uses his money to start his own business?
a. $7,500/year
b. $8,000/year
c. $19,500/year
d. $12,000/year
e. $150,000/year
d
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From the economic point of view, "joint costs" are problematic because
A) they can only be determined in markets for illicit drugs. B) there is no way to correctly allocate joint costs. C) they can be measured only by the most sophisticated accounting techniques. D) there is no way to discuss the concept meaningfully.
What is meant by the prisoners' dilemma? Do the players in the prisoner's dilemma game have a dominant strategy?
What will be an ideal response?
Which of the following is a microeconomics question?
A) What determines the average price level and inflation? B) How much will be saved and how much will be produced in the entire economy? C) What will the level of economic growth be in the entire economy? D) What factors determine the price of carrots?
Keynesians believe that the difference between using an increase in the money supply compared with an increase in government spending to increase aggregate demand in the event of a recession is that if government spending is increased, ________ will
be ________ than if the money supply is increased. A) real interest rate; higher B) real interest rate; lower C) the price level; lower D) the price level; higher