Refer to the information provided in Figure 2.5 below to answer the question(s) that follow.
Figure 2.5Refer to Figure 2.5. The economy is currently at Point A. The opportunity cost of moving from Point A to Point B is the
A. 30 LCD televisions that must be forgone to produce 60 additional OLED televisions.
B. 90 LCD televisions that must be forgone to produce 20 additional OLED televisions.
C. 30 LCD televisions that must be forgone to produce 20 additional OLED televisions.
D. 120 LCD televisions that must be forgone to produce 40 additional OLED televisions.
Answer: C
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The nominal interest rate is determined by:
A. the point where the supply of money meets the demand for money. B. the Fed. C. the Treasury. D. inflation.
Discontinuing a Missile Program Merowak Missiles has developed its Democratizer Offensive Weapon System (DOWS) for the US military. After sinking $1 billion into R&D and design, it spent $0.5 billion building the tools and production facility that are
unique to DOWS production. It houses these in standard factory floor space that costs $1 million. Each missile has a marginal cost of $2,000 . The Pentagon is thinking of discontinuing the program because the missiles are too expensive. If Merowak were to get an order for 50,000 missiles, what would its breakeven price be?
The political incentive structure tends to
a. encourage a balanced budget regardless of economic conditions. b. discourage budget deficits during recessions. c. encourage budget surpluses during both recessions and expansions. d. encourage budget deficits during both recessions and expansions.
Other things the same, an increase in wages above their equilibrium level
a. increases frictional unemployment but leaves the natural rate of unemployment unchanged. b. increases frictional unemployment and increases the natural rate of unemployment. c. increases structural unemployment but leaves the natural rate of unemployment unchanged. d. increases structural unemployment and increases the natural rate of unemployment.