In the two-period utility maximization model the opportunity cost of one unit of C1 is
a. one unit of C0.
b. 1 + r units of C0.
c. 1/(1 + r) units of C0.
d. cannot be determined without more information.
c
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The assumption that the marginal utility of wealth diminishes implies that
A) total utility falls when wealth increases. B) the marginal utility of wealth is negative. C) total utility increases with wealth and each additional unit of wealth increases total utility by a smaller amount. D) total utility increases with wealth and each additional unit of wealth increases total utility by the same amount.
The equation below gives the degree of economies of scope (SC):
SC = (C(Q1 ) + C(Q2 ) - C(Q1,Q2 )) / C(Q1,Q2 ) where C(Q1 ) is the cost of producing output Q1, C(Q2 ) is the cost of producing output Q2, and C(Q1,Q2 ) is the joint cost of producing both outputs. If SC is negative: A) there are neither economies nor diseconomies of scope. B) there are economies of scope. C) there are diseconomies of scope. D) there are both economies and diseconomies of scope.
Which of the following is the best statement about how the amount of the net public debt that a typical individual owes to the holders of the debt has varied in the recent past?
A) The amount has not varied much over time. B) The amount has varied a lot over time. C) The amount has steadily increased over time. D) The amount has steadily decreased over time.
The age-earning cycle shows an individual typically earning
A. an income that declines until age 30-35 and then increases rapidly. B. an income that cycles upward and downward as an individual ages. C. an income that increases with age, peaks, and then falls as retirement approaches. D. a constant income (adjusted for inflation) over the entire working life of the worker.