In the movie Cast Away, Tom Hanks plays a FedEx efficiency expert stranded on a deserted island. While on the island, he divides his time between catching fish, gathering coconuts, painting, and building a raft
Suppose that these were Mr. Hanks' only activities. Did he face an opportunity cost from pursuing any of these activities? Why or why not?
Yes, Mr. Hanks faces an opportunity cost from all of these endeavors. If he decides to use his time catching fish, he cannot gather coconuts, paint, or build a raft. Whatever he would have been otherwise doing is his opportunity cost of catching fish. Similarly, time spent on building his raft means less time painting, or fewer coconuts for breakfast, or fewer fish for dinner.
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Which of the following would directly increase the capital stock of an economy?
A) An individual purchases shares of corporate stock B) An individual purchases high-risk corporate bonds C) A business firm expands its production facilities D) A bank uses cash reserves to purchase shorthand long-term government securities E) The government implements a spending program to cover prescription drugs for Medicare reciepts
In general, pollution exists in situations in which
A) people are selfish. B) people refuse to take social responsibility seriously. C) there are poorly defined private property rights. D) there exists public property.
Under deferred compensation packages,
A) a moral hazard occurs if a firms fires a good worker before the worker receives her deferred compensation. B) a moral hazard occurs if workers decide not to shirk so as to receive the deferred compensation. C) moral hazards are avoided. D) workers' wages are below their marginal revenue product as they near retirement.
A structurally unemployed person is
A. not counted as part of the labor force. B. an individual who cannot find a job because his or her job skills have become obsolete. C. an individual who is switching jobs within the same industry. D. an individual who cannot find a job because of a recession.