Explain why opportunity cost is the best forgone alternative and provide examples of some opportunity costs that you have faced today
What will be an ideal response?
When a decision to undertake one activity is made, often many alternative activities are no longer possible. Often these activities are mutually exclusive so only the highest valued alternative is actually forgone. For instance, the decision to go to a student's 8:30 AM class eliminates the possibility of sleeping in during the hour and of jogging during the hour. But in this case, it is impossible to both sleep in and to jog during the hour, so the opportunity cost cannot be both activities. What is lost is only the activity that otherwise would have been chosen—either sleeping in or jogging—which is whatever activity would have been chosen, that is, the most highly valued of the forgone alternatives. For students, attending class, doing homework, studying for a test are all activities with opportunity costs.
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Under conditions of perfect competition, average fixed cost
a. rises as output increases. b. falls as output increases. c. decreases then rises. d. increases and then falls.
Which of the following best represents the money supply?
A) Money supply = Monetary base. B) Money supply = Monetary base / Money multiplier. C) Money supply = Money multiplier ( Currency in circulation + Reserves). D) Money supply = (Currency in circulation + Reserves) / Money multiplier.
A business fluctuation when the pace of economic activity is slowing down is called
A) a reduction. B) a contraction. C) a depression. D) a slowdown.
Inflation targeting does all of the following except:
A. communicate policymakers' objectives clearly and openly. B. increase policymakers' accountability. C. increase policymakers' credibility. D. hinder economic growth.