A country produces only apples and bananas. Moving from point A to point B along its production possibilities frontier, 5 apples are forgone and 4 bananas are gained. What is the opportunity cost of a banana?
A) 1 banana
B) 5/4 of an apple
C) 4 apples
D) 4/5 of an apple
E) None of the above answers is correct.
B
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A geologist tells the ACME Mining Company she's certain there is a gold vein one thousand feet below the surface of its property, but ACME still decides not to mine for that gold. How would an economist explain their decision?
A) The owners of ACME aren't as greedy as other mining operations. B) The owners of ACME probably distrust the geological reports. C) The owners of ACME feel the additional costs of mining for gold outweigh the additional benefits. D) The owners of ACME are ignorant of the basic principles of economics.
Comparative advantage in production is achieved by
A. Subsidizing, specializing, and lowering the price of an exported good. B. Being able to produce a good with fewer inputs than in other countries. C. Having a lower opportunity cost of producing a good relative to that of other countries. D. Having terms of trade that are better than the terms of trade faced in other countries.
In general, when the quantities of a complementary resource are increased, the productivity of the other resources
A. rise. B. fall. C. remain the same.
The purely competitive employer of resource A will maximize the profits from A by equating the:
A. price of A with the MRP of A. B. marginal productivity of A with the MRC of A. C. marginal productivity of A with the price of A. D. price of A with the MRC of A.