Tommy spends most of his monthly budget on $3 video game rentals or $6 packets of baseball cards. The opportunity cost to Tommy of an extra packet of baseball cards is
A. one video game rental.
B. two video game rentals.
C. the cost of the baseball cards.
D. he does not incur an opportunity cost.
B. two video game rentals.
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Other things being equal, a decrease in an economy's exports will
A. decrease domestic aggregate expenditures and the equilibrium level of GDP. B. increase domestic aggregate expenditures and the equilibrium level of GDP. C. increase the amount of imports consumed by the private sector. D. have no effect on domestic GDP because imports will offset the change in exports.
After the Arab oil embargoes, there was concern about the impact of higher gas prices on the low-income worker. The government imposed price controls on oil to protect the poor from this situation. Explain the inefficiency of this price ceiling and how taxes, rather than prices, could be used to solve the problem.
What will be an ideal response?
On a graph we draw a consumer's budget constraint, measuring the number of apples on the horizontal axis and the number of light bulbs on the vertical axis. If the slope of the budget constraint is -2, then
a. an apple costs twice as much as a light bulb. b. the opportunity cost of a light bulb is 2 apples. c. the opportunity cost of an apple is one-half of a light bulb. d. All of the above are correct.
If average labor productivity decreases while population and the number of employed workers remain constant, then total output:
A. increases. B. decreases. C. may increase or decrease. D. remains constant.