One reason why present dollars are worth more than future dollars is because income-earning investment opportunities exist.
Answer the following statement true (T) or false (F)
True
A dollar received today is worth more than a dollar received two years from today because it can be saved in an interest-bearing account and in two years you'll have your original dollar plus accumulated interest.
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Which of the following describes a moral hazard problem?
A) a process by which individuals have substantial resources devoted to the exchange process and need to make a profit or they will be adversely affected B) a process by which individual buyers or sellers with better information are more likely to participate in voluntary exchange C) a contractual problem that results because monopolies exist in all economies D) a post-contractual problem that may result because participants to the exchange process have information that allows them to act in an opportunistic manner
Who ends up paying when sunk costs are incurred as a result of erroneous forecasting?
A) No one pays them because they are sunk. B) The consumer, because they eventually show up as higher prices. C) The government, since they fall evenly on the entire community. D) The taxpayer, because they produce a decline in assessed valuations. E) Whoever invested in the unsuccessful project.
Which of the following would be classified as a variable cost for the local Texaco station?
A) interest payments to a local bank for a 5-year loan B) the total wages paid to the workers who are all paid $16.00 per hour, no matter how many hours they work each week C) the premiums paid for liability insurance, which are constant throughout the life of the contract D) the opportunity cost of money used to finance the installation of some new pumps
Refer to Figure 14.2. Suppose workers expect inflation to rise from 1% to 3% next year. Other things equal, this would best be represented by a movement from
A) point A to point B. B) point B to point A. C) point B to point C. D) point A to point C.