Joe sold gold coins for $1,000 that he bought a year ago for $1,000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money because he could have received a 3% percent return on the $1,000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of
A. opportunity costs.
B. imperfect information.
C. marginal benefits that exceed marginal costs.
D. normative economics.
Answer: A
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What will be an ideal response?
Under a system of fixed exchange rates, what happens if a country's currency is undervalued?
A) The central bank loses official reserve assets. B) The central bank gains official reserve assets. C) The currency depreciates. D) The exchange rate falls.
If the demand for a product decreases, then we would expect equilibrium price
a. to increase and equilibrium quantity to decrease. b. to decrease and equilibrium quantity to increase. c. and equilibrium quantity to both increase. d. and equilibrium quantity to both decrease.
Which of the following decreases if the U.S. removes an import quota on computer components?
a. U.S. imports and U.S. exports. b. U.S. imports but not U.S. exports. c. U.S. exports but not U.S. imports. d. Neither U.S. exports nor U.S. imports.