A farmer has the ability to grow either corn or cotton or some combination of the two. Given no other information, it follows that the farmer's opportunity cost of a bushel of corn multiplied by his opportunity cost of a bushel of cotton
a. is equal to 0.
b. is between 0 and 1.
c. is equal to 1.
d. is greater than 1.
c
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Agraria is a small agricultural country that does not trade with the rest of the world. Based on this information, we can conclude that Agraria is a(n) ________ economy
A) closed B) communist C) command D) open
An increase in government spending will have the greatest expansionary impact on the economy if it is combined with:
a. an increase in tax revenue equal to the increase in spending. b. a decrease in tax revenue equal to the increase in spending. c. unchanged tax revenue. d. none of these is true.
The term that refers to the price level rising at a low rate is
a. hidden inflation b. creeping inflation c. repressed inflation d. disinflation e. deflation
Which of the following illustrates the principle of second best?
A. The government decides to impose taxes on all automobiles rather than imposing a tax only on luxury automobiles. B. The government imposes a tax on a meat processing plant that equals the cost of cleaning the lake damaged by the waste discharged into the lake by the meat processor. C. A tax imposed on land, because this tax distorts economic decisions less than taxes on other factors of production. D. The government imposes taxes on cigarettes and the tax revenue collected is used to pay for health care.