Why does the opportunity cost of producing a good rise as more resources are devoted to producing that good?
What will be an ideal response?
The opportunity cost of a good rises as we devote more resources to producing it because some resources are better suited to the production of one good than another. This is known as the law of increasing opportunity cost.
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The welders' union at Ajax is on strike. The maintenance union has decided to walk out in support of the welders' union. This is known as
A) a closed shop. B) a union shop. C) a sympathy strike. D) a secondary boycott.
GDP can be calculated by the value-added approach, which
a. is useful in avoiding double counting. b. includes only the value-added portion from the sale of goods and services. c. includes the revenue a firm receives from selling a product minus the amount paid for goods purchased from other firms. d. All of the above correct.
The market for beef is in long-run equilibrium at a price of $3.25 per pound. The announcement that mad cow disease has been discovered in the United States reduces the demand for beef sharply, and the price falls to $2.00 per pound. If the long-run supply curve is horizontal, then when the long-run equilibrium is reestablished, the price will be:
Select one: A. $3.25 per pound. B. More information is needed to answer this question. C. $2.00 per pound. D. greater than $2.00 per pound but less than $3.25 per pound.
You are given the following information about aggregate demand at the existing price level for an economy: (1) consumption = $400 billion; (2) investment = $40 billion; (3) government purchases = $90 billion; and (4) net export = $25 billion. If the full-employment level of GDP for this economy is $600 billion, then what combination of actions would be most consistent with closing the GDP-gap here?
A. Increase government spending and taxes B. Decrease government spending and taxes C. Decrease government spending and increase taxes D. Increase government spending and decrease taxes