1. An unemployed individual decides to spend the day fishing. The opportunity co
ID: 2505531 • Letter: 1
Question
1. An unemployed individual decides to spend the day fishing. The opportunity cost of fishing is equal to
A) the cost of bait and any other monetary expenses.
B) zero, because the person doesn't have a job.
C) the cost of bait, any other monetary expenses, and the value of the individual's wages while he was working.
D) the cost of bait, any other monetary expenses, and the value of the best alternative use of the individual's time.
2. Arrow up or down: An increase in the wage for high school graduates __________ the opportunity cost of college.
A) arrow up
B) arrow down
3) The _______________ illustrates the notion of opportunity cost. If an economy is fully utilizing its resources, it can produce more of one product only if it produces less of another product
A) marginal principle
B) variable analysis
C) production possibilities curve
D) principle of diminishing returns
4. You just inherited a house with a market value of $300,000, and do not expect the market value to change. Each year, you will pay $1,000 for utilities and $3,000 in taxes. You can earn 6 percent interest on money in a bank account. Your cost of living in the house for a year is $ ___________.
A) $18,000
B) $18,240
C) $22,000
D) $240
5. If you have $10,000 to start a lawn-cutting business, the interest rate is 6 percent, your annual cost of raw materials are $4,000, and the earnings you sacrifice from working at another job are $37,000, your yearly cost of doing business would be
A) $14,000
B) $14,600
C) $31,800
D) $41,600
Explanation / Answer
(1) D) the cost of bait, any other monetary expenses, and the value of the best alternative use of the individual's time.
(2)A) arrow up
(3)
C) production possibilities curve
(4)
B) $18,240
(5)
D) $41,600
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