What is the reason for the law of increasing opportunity costs?
A) There is no reason: it is just one of the laws of economics.
B) Resources have varying abilities and those with lower opportunity costs of producing a good will be used to produce it before resources with higher opportunity costs produce it.
C) The price of a good rises as more of it is demanded.
D) As more of a good is produced, the taxes applied to the production of the good rise.
E) c and d
B
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According to the classical model, real wages should
A) remain constant. B) fall during recessions. C) rise during recessions. D) stay the same during recessions but rise during expansions.
A subsidy for pollution not produced can induce producers to pollute at the efficient level.
A. True B. False C. Uncertain
Refer to the information provided in Table 8.6 below to answer the question(s) that follow.
Table 8.6
Refer to Table 8.6. The marginal cost of the fourth unit is ________ and the average total cost of four units is ________.
A. $15; $17.50 B. $10; $22.50 C. $5; $15 D. indeterminate from the given information
A mainstream criticism of the rational expectations theory is that:
A. The theorists confuse correlation with causation in interpreting the empirical evidence B. People do not make consistent forecasting errors which can be exploited by policy makers C. Many markets are not purely competitive and do not adjust rapidly to changing market conditions D. The data indicate that economic policy does not affect real GDP and employment