Opportunity cost is best defined as
A) the sum of the dollar values of all alternatives given up when choices are made.
B) the cost of producing the purchased goods.
C) the next highest valued alternative when a choice is made.
D) the dollar price of the purchased item.
Answer: C
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
For a firm in monopolistic competition, innovation and product development are
A) senseless because economic profit is always zero in the long run. B) necessary in order to have a chance of earning at least a short-run economic profit. C) inconsequential because each firm produces a different product. D) necessary to allow new firms to enter. E) uncommon because other firms already produce similar products.
Referring to a production possibilities curve and the goods being compared, depict the economic event. Widespread use of the assembly line revolutionizes U.S. industry in the early 20th century (capital vs. consumer goods).
A. A movement from a point inside the curve to a point on the curve B. A movement from a point on the curve to a point inside the curve C. A shift in the entire curve to the right (outward) D. A shift in the entire curve to the left (inward)
A country can consume outside its production possibilities curve by trading.
Answer the following statement true (T) or false (F)