Between points "b" and "c" in the above figure, the opportunity cost of 250 more bushels of corn is
A) 200 yards of cloth.
B) 250 yards of cloth.
C) 600 yards of cloth.
D) 800 yards of cloth.
A
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The main argument in favor of Fed independence is that
A) interest rates would probably be lower if Congress controlled the Fed; thus hurting savers. B) the Constitution requires it. C) monetary policy is too important and too technical to be determined in the political arena. D) congressional control of the Fed was tried during the 1960s and did not work well.
In the long run, an economy will produce its potential output if: a. workers mistakenly believe that nominal wages equal real wages
b. the expectations of workers and firms are the same in the long and short run. c. wages and prices are sufficiently flexible. d. the price level is high. e. the price level is low.
During the 1970s, U.S. prices generally rose faster than prices in other parts of the world. Which of the following changes would the open economy effect predict took place in response to these price level changes? a. Americans reduced the proportion of foreign goods bought since their foreign prices became relatively lower. b. Americans reduced the amount of investment they undertook because
interest rates increased. c. Americans reduced the amount of goods and services they wanted to purchase for consumption because they felt less wealthy. d. Americans reduced the fraction of purchases they made from domestic producers of goods and services, since foreign prices became relatively lower.
Which of the following statements is not valid when supply is perfectly elastic?
a. The elasticity of supply approaches infinity. b. The supply curve is horizontal. c. Very small changes in price lead to very large changes in quantity supplied. d. The time period under consideration is more likely a short period rather than a long period.