The principle that individuals and firms pick the activity level where the incremental benefit of that activity equals the incremental cost of that activity is known as the:
A. marginal principle.
B. principle of opportunity cost.
C. principle of diminishing returns.
D. spillover principle.
Answer: A
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If ________ GDP exceeds ________ GDP, employment exceeds its full-employment level and the unemployment rate is ________ the natural unemployment rate
A) real; nominal; below B) real; potential; below C) real; potential; above D) nominal; potential; above E) nominal; potential; below
A rule that specifies the highest price that a regulated firm is permitted to set is called
A) rate of return regulation. B) price cap regulation. C) maximum price regulation. D) average/marginal cost pricing.
Measuring "y" on the vertical axis and "x" on the horizontal axis, convexity of indifference curves implies that the MRS of "y" for "x"
A) is decreasing as "x" increases. B) is increasing as "x" increases. C) is constant as "x" increases. D) cannot be calculated for large levels of "x".
When some jobs are inherently more risky or unpleasant than other jobs, different workers will be paid different wages because of
a. differences in human capital. b. differing access to capital. c. compensating differentials. d. discrimination.