Trent decides to spend an hour playing basketball rather than studying. His opportunity cost is:
a. nothing because he enjoys playing basketball more than studying
b. the foregone benefit to his grades from studying for an hour.
c. the increase in skill he obtains from playing basketball for that hour.
d. nothing because he had a free pass into the sports complex to play basketball.
b
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Jackson buys an automobile insurance policy and then decides to drive recklessly because he knows he is insured in case he has an accident. This describes the problem of
A) adverse selection. B) asymmetric information. C) moral hazard. D) risk pooling.
In the short run, a perfectly competitive firm's most profitable level of output is where:
a. marginal cost exceeds marginal revenue. b. total revenue is at a maximum. c. marginal cost equals marginal revenue. d. All of these.
If the economy is in equilibrium and suddenly the level of planned investment increases by $2 billion, national income will increase by
a. $2 billion and stabilize at that level. b. less than $2 billion because of MPS. c. more than $2 billion because of MPC. d. less than $2 billion because of MPC.
Refer to Figure 13A.1. The stock of capital no longer increases once the economy reaches point:
A. a. B. b. C. c. D. e.