Assume a society can produce either beer or wine. If the marginal rate of transformation of gallons of beer into gallons of wine is 0.5, then the opportunity cost of wine is
A. the 2 gallons of wine that must be forgone.
B. the additional 0.5 gallons of beer that can be produced.
C. the 0.5 gallons of beer that must be forgone.
D. the 2 gallons of beer that must be forgone.
Answer: C
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Assume you are working at a department store and you are told by the manager to cut prices by 20% for all the new women's sweaters that are currently priced at $50
What will be the new price of these sweaters? Suppose the manager tells you to raise the prices back up by 20%. What is the new price of the sweaters? Why is your answer not the same as the original price of the sweaters? What importance does this have for why the midpoint formula is used in calculating price elasticity?
Explain how an increase in government spending would affect the DD-AA schedule in the short run
What will be an ideal response?
The perfectly competitive firm's short-run shutdown rule is to shut down immediately if
a. TR < TC. b. TR < SRFC. c. TR < SRVC. d. TR < MC > Q.
In a system of 100-percent-reserve banking, the purpose of a bank is to
a. make loans to households. b. influence the money supply. c. give depositors a safe place to keep their money. d. buy and sell gold.