Jim bought a new bike and rides it every day, while his old one sits in the garage untouched. Jim’s opportunity cost of keeping the old bike is:
A. nothing, since he doesn't really value it anymore.
B. whatever he could sell it for.
C. whatever he would be willing to sell it for.
D. All of these are true.
B. whatever he could sell it for.
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When a proposed merger between two companies is reviewed by the government, the relevant market is defined by
A) how elastic the demand is for each firm's product. B) how much advertising is done in the industry. C) whether or not there are close substitutes for the products of the two firms. D) counting the number of firms that produce the same product.
When you get a car loan, the lending institution usually sends a check directly to the car dealer. Such a practice
A) helps forestall moral hazard. B) helps forestall adverse selection. C) gives rise to moral hazard. D) gives rise to adverse selection.
According to advocates of income inequality, if income were to be distributed equally,
a. productivity would increase b. it would take a little time for the distribution to become unequal again c. efficient allocation of resources would occur d. the MRP of the poor would rise and the MRP of the rich would fall e. productivity would decrease
Suppose there is a decrease in the confidence that workers have in their future employment and income. This will cause
A. a decrease in borrowing, which will decrease interest rates. B. a decrease in saving, which will decrease interest rates. C. a decrease in saving, which will increase interest rates. D. a decrease in borrowing, which will increase interest rates.