When opportunity costs rise as more of a good is consumed, the production possibilities frontier will be concave (bowed out) with respect to the origin
a. True
b. False
A
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A bank manager advises all of his loan officers that the average cost of funds for the bank over the past year has been 6%. The bank has borrowed $1 million at 5%, another $1 million at 6% and another $1 million at 7%
Future borrowing costs are expected to continue at 7%. The manager however, instructs his loan officers that they are authorized to make loans at interest rates that are equal to or greater than the bank's average cost of borrowing. How would you evaluate the bank manager's decision?
The supply of public school places is determined by
(a) individuals' demand for education. (b) direct and indirect costs of schooling. (c) political processes, often unrelated to economic criteria. (d) all of the above.
The demand for labor is likely to increase when
a. the supply of the good it produces falls b. the demand for the good it produces rises c. the supply of the good it produces rises d. the demand for the good it produces falls e. the real wage rate rises
If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output. B. lower price level and lower level of output. C. higher price level and higher level of output. D. lower price level and higher level of output.