For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries?
a. The opportunity cost of producing watches is higher in Denmark.
b. The opportunity cost of producing cheese is higher in Denmark.
c. The opportunity cost of producing cheese is identical in both countries.
d. It is impossible to compare opportunity costs because the two countries use different currencies.
e. In both countries combined, the opportunity cost of one watch is 150 pounds of cheese.
B
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The Laffer curve shows that as tax rates increase
A) initially tax revenues increase, then decrease. B) tax revenues decrease as the incidence of cheating on tax returns increases. C) tax revenues increase as more individuals and businesses have to pay taxes. D) tax revenues remain unchanged.
Monopolistic competitive firms in the long run earn:
a. negative economic profits. b. zero pure economic profits. c. None of these choices are correct. d. positive economic profits.
It is not uncommon for people to say something like, "If we can put someone on the moon we should be able to . . . ," followed by the person's favorite project. What response can an economist make to this person?
What will be an ideal response?
Refer to Scenario 13.1 below to answer the question(s) that follow. SCENARIO 13.1: The government of Catalina Island is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P = 55 - 0.01Q, where Q is the number of households that would subscribe to the cable service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR = 55 - 0.02Q. Universal Entertainment is interested in bidding for the right to provide cable service on Catalina Island. It has a constant average and marginal cost of $15 for providing cable service to each household.Refer to Scenario 13.1. If Universal Entertainment were to be awarded the exclusive right to provide cable
service on Catalina Island, how many households would it service? A. 2,000 B. 2,750 C. 4,000 D. 5,500