The concept of opportunity cost is that
A) in a market economy, taking advantage of profitable opportunities involves some money cost.
B) the economic cost of using a factor of production is the alternative use of that factor that is given up.
C) taking advantage of investment opportunities involves costs.
D) the cost of production varies depending on the opportunity for technological application.
Answer: B
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If your risk of losing your house to catastrophe is 25%, how much would fair insurance cost if your home were worth $1,000,000?
A) $250,000 B) $750,000 C) $1,000,000 D) Unable to determine with the information given.
A steel factory has the right to discharge waste into a river. The waste reduces the number of fish, causing damage for fisheries. Let X denotes the quantity of waste dumped. The marginal damage, denoted MD, is given by the equation MD = 2 + 5Q. The marginal benefit (MB) of dumping waste is given by the equation MB = 34 - 3Q.
(a) Calculate the efficient quantity of waste. (b) What is the efficient fee, in dollars per unit of waste, which would cause the firm to dump only an efficient quantity of waste? (c) What would be the quantity dumped if the firm did not care about the fishery?
Bob Smith's money wages rose from $32,000 to $48,000, while the CPI rose by 50%. His real wages
A. fell by 50%. B. stayed the same. C. rose by 25%. D. rose by 50%.
In the short run, total output in an industry:
A. Is absolutely fixed B. Can vary as the result of using a fixed amount of plant and equipment more or less intensively C. May be altered by varying the size of plant and equipment which now exist in the industry D. Can vary as the result of new firms entering or leaving the industry