Assume a society can produce either beer or wine. If the marginal rate of transformation of gallons of beer into gallons of wine is 0.5, then the opportunity cost of wine is
A. the additional 0.5 gallons of beer that can be produced.
B. the 0.5 gallons of beer that must be forgone.
C. the 2 gallons of beer that must be forgone.
D. the 2 gallons of wine that must be forgone.
Answer: B
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Suppose that you could either prepare your own tax return in 15 hours or hire a tax specialist to prepare it for you in 2 hours. You value your time at $11 an hour; the tax specialist will charge you $55 an hour. The opportunity cost of preparing your own tax return is
A. $55. B. $165. C. $110. D. $40.
If nominal GDP is $10 trillion and real GDP is $8 trillion, then the GDP deflator is
a. 80, and this indicates that the price level has decreased by 20 percent since the base year. b. 80, and this indicates that the price level has increased by 80 percent since the base year. c. 125, and this indicates that the price level has increased by 25 percent since the base year. d. 125, and this indicates that the price level has increased by 125 percent since the base year.
Suppose you have a money income of $10, all of which you spend on Coke and popcorn. In the diagram, the prices of Coke and popcorn, respectively, are
What will be an ideal response?
Which of the following is not a barrier to entry?
A. Well-established brand loyalty. B. Patents. C. Perfect information. D. Control of distribution outlets.