"The money and resources currently being devoted to the War on Terrorism reduces the quantity of other goods that we are able to supply." This statement most clearly illustrates which of the following?
What will be an ideal response?
the concept of opportunity cost
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Holding other factors constant, if new technology becomes available that allows machines to produce manufactured goods more quickly and with fewer defects, then the real interest rate will ________ and the equilibrium quantity of national saving and investment will ________.
A. increase; decrease B. decrease; increase C. increase; not change D. increase; increase
Refer to the graph shown. Suppose the market price is $3. At this price, a perfectly competitive firm should:
A. continue to produce in both the short run and the long run. B. shut down in the short run but continue production in the long run. C. shut down immediately. D. continue to produce in the short run but shut down in the long run.
If a good is _______, the income effect is negative for a price increase and positive for a price decrease.
A. inferior B. superior C. normal D. Giffen
The quantity supplied of hot dogs is 200 at the unit price of $3.50. Suppose the price elasticity of supply by the initial value method is 2, and you would like to induce sellers to increase the quantity of hot dogs supplied to 220. Then new price must be:
A. $1.5. B. $2. C. $2.5. D. $3.