QUESTION 11 Check your book for an explanation of double counting costs) Conside
ID: 1132631 • Letter: Q
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QUESTION 11 Check your book for an explanation of double counting costs) Consider Diego's decision to go to college. If he goes to college, he will spead $21,000 on tuition $11,000 on cost of going to college is room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7.200 on room and board. Diego's O a. $33,800. Ob.$57,000o. $42,600. d. $49,800. QUESTION 12 The bowed shape of the production possibilities frontier can be explained by the fact that O a the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing b.all resources are scarce. OC economic growth is always occurring Od the only way to get more of one good is to get less of the other. QUESTION 13 government changes a policy, people are likely to respond to such policy change Oa only if they think the policy is a good one. O b.only if the policy change changes their costs. Oc only if the policy change changes their benefits. if the policy changes either their costs or benefits
Explanation / Answer
11. Diego's opportunity cost of going to college is the spending he makes tution, room and books (these costs are included in opportunity cost because he could have used those money on something else) plus his income from his foregone alternative, that is the income he could've earned working in a store.
Therefore, opportunity cost = $(21000+11000+1800+16000) = $49,800
Answer-option D
12. The bowed shape of PPF occurs due to increasing opportunity cost, i.e. it implies that to get more of one good you'll get less of the other. Scarcity implies that a PPF is downward sloping.
Answer-option D
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