Opportunity cost is best defined as
A. the sum of the dollar values of all alternatives given up when choices are made.
B. the next highest valued alternative when a choice is made.
C. the cost of producing the purchased goods.
D. the dollar price of the purchased item.
Answer: B
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An earthquake destroys a good portion of the capital stock. How would you expect this to affect the capital—labor ratio in the long run? There would be
A) a rightward movement along the saving-per-worker curve and an increase in the capital—labor ratio. B) no change in the long-run capital—labor ratio. C) a downward shift in the saving-per-worker curve and a decrease in the capital—labor ratio. D) a leftward movement along the saving-per-worker curve and a decrease in the capital—labor ratio.
What are the economic effects of a currency appreciation?
a. It will decrease aggregate demand and aggregate supply, so that output will certainly fall, and prices may fall as well. b. It will increase aggregate demand and aggregate supply, so that output will certainly rise, and prices may rise as well. c. It will increase aggregate demand and decrease aggregate supply, so that prices will certainly rise and output may rise as well. d. It will decrease aggregate demand and increase aggregate supply, so that prices will certainly fall and output may fall as well.
Compare market price and quantity to socially optimal price and quantity if hog farmers ignore the polluting effect of hog waste on nearby waterways. Use a graph to assist in your explanation.
What will be an ideal response?
Assume that in the economy real Gross Domestic Product (GDP) grows at a constant rate. There has just been a decrease in the rate of growth of the population. This implies that the
A. rate of growth of per capita real GDP will decrease. B. rate of growth of capital accumulation will decrease. C. rate of growth of capital accumulation will increase. D. rate of growth of per capita real GDP will increase.