Chris has a one-hour break between classes every Wednesday. Chris can either stay at the library and study or go to the gym and work out. The decision Chris must make is:
A. not an economic problem because neither activity costs money.
B. an economic problem because Chris has only one hour, and engaging in one activity means giving up the other.
C. not an economic problem because it's an hour that Chris has no matter what he does.
D. an economic problem because the tuition Chris pays covers the cost of both the gym and the library.
Answer: B
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Which of the following is a reason why we should consider the federal national debt a problem?
A) If the debt was incurred to finance research and development, crowding out will occur. B) If the debt drives up interest rates, crowding out will occur. C) The federal government is in danger of defaulting on its debt. D) If the debt was incurred to finance improvements in infrastructure, crowding out will occur.
A perfectly competitive firm producing 100 units of output per period finds that: Average total cost is $20; Average variable cost is $12; Marginal cost is $18 and increasing; Price of the product is $15. This firm should
a. produce more output b. raise the price of its product c. reduce production without shutting down d. shut down (reduce output to zero) e. do nothing (it is currently maximizing profit)
To avoid a coordination failure, the intentions of savers and investors must be both
a. increasing. b. at their planned levels. c. more than full employment GDP. d. at levels set by the government.
A contingent contract can create production inefficiency; however, many principals accept this because
A) inefficiency is inevitable. B) monitoring is costless. C) risk is reduced. D) profit will increase as a result.