If a major league baseball player would be willing to work for $500,000 per year and is currently being paid $1,200,000 per year, the opportunity cost of his decision to play baseball is
A) $500,000.
B) $1,200,000.
C) $1,700,000.
D) $700,000.
Answer: A
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An economy produces only food and shelter. There are two individuals in the economy: Bill and Mary. Mary's opportunity cost of producing 1 unit of shelter is 2 units of food. Bill's opportunity cost of producing 1 unit of shelter is 4 units of food
A) Bill has a comparative advantage over Mary in the production of shelter. B) Mary has a comparative advantage over Bill in the production of food. C) Mary has a comparative advantage over Bill in the production of shelter. D) Bill has an absolute advantage over Mary in the production of shelter.
Suppose that when the price of oranges decreases, Sarita decreases her purchases of peaches. To Sarita,
A) oranges and peaches are normal goods. B) oranges and peaches are substitutes. C) oranges and peaches are complements. D) oranges and peaches are inferior goods.
If the market interest rate is 5 percent, the opportunity cost of $100 worth of present consumption
a. is $105 today b. is $105 next year c. is $5 today d. is $5 next year e. cannot be determined unless we know the consumer's rate of time preference
How do markets respond to price ceilings and price floors? Do attempts to repeal the laws of supply and demand meet their objectives?