Opportunity cost is the difference between the nominal and real cost of some action
Indicate whether the statement is true or false
FALSE
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A law that requires the money supply to grow by a fixed percentage each year would eliminate
a. the time inconsistency problem, but not political business cycles. b. the political business cycle, but not the time inconsistency problem. c. both the time inconsistency problem and political business cycles. d. neither the time inconsistency problem nor political business cycles.
The fastest-growing areas for state expenditures are
A. Transportation and public safety. B. Education and welfare. C. Prisons and welfare. D. Sewage and trash service.
Consider a cable TV company which is subject to an average-cost pricing regulation. If the number of subscribers decreases:
A. the company will have to operate at a smaller profit unless it suffers an economic loss. B. the company will have to charge a relatively low price as the demand curve facing the firm shifts to the left. C. the company will charge more per customer as its average cost increases. D. None of these
An efficient policy to reduce pollution would reduce pollution to the point where:
A. it is eliminated. B. the marginal costs of reducing pollution equal the marginal benefits of reducing pollution. C. the marginal costs of reducing pollution are greater than the marginal benefits of reducing pollution. D. the marginal costs of reducing pollution are less than the marginal benefits of reducing pollution.