The opportunity cost of a decision can be examined by using a:
a) production possibilities graph
b) factors of production chart
c) global trade-off grid
d) graph of increasing costs
Answer: a) production possibilities graph
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Assume Bryce's budget constraint is represented by line C in the graph shown. Which of the following would cause Bryce's budget constraint to shift to A?
A. Bryce's income increased.
B. Bryce's income decreased.
C. Bryce's preferences for books and movies decreased.
D. Bryce's preferences for books and movies increased.
A homeowner discovers that a large tree in his yard is diseased and may fall in a bad windstorm and if it falls, it will likely destroy the garage. The cost to have the tree cut down is significant but the homeowner has an insurance policy and figures that if the tree falls and destroys the garage, the insurance company will pay, and the deductible is less than the cost to have the tree removed. This is an example of:
A. adverse selection. B. screening. C. moral hazard. D. information symmetry.
At a fixed level of worker productivity, ________
A) lower wages reduce quantity of labor demanded B) higher wages reduce cost of production C) higher wages reduce profits D) lower wages increase quantity of labor supplied
According to Regulation Q, the maximum interest rate that the U.S. banks could pay on deposits was limited by the Federal Reserve. This reduced volatility in the financial markets and largely benefited the U.S. banks
a. True b. False Indicate whether the statement is true or false