The opportunity cost of any action is
a. irrelevant to economic theory
b. limited to the out-of-pocket cost incurred
c. the sunk cost plus the markup on materials and labor
d. what we gain in the process of consumption
e. what is sacrificed to pursue that action
E
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Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly. Which of the following statements regarding economic surplus in each market structure is true?
A) Under perfectly competitive conditions, economic surplus is equal to consumer surplus; there is no producer surplus because firms are price takers. Under monopoly conditions, economic surplus is equal to producer surplus. B) Under perfectly competitive conditions, economic surplus in this industry is maximized. Under monopoly conditions economic surplus is minimized. C) Under perfectly competitive conditions, economic surplus is maximized. Under monopoly conditions economic surplus is less than under perfect competition and there is a deadweight loss. D) Under perfectly competitive conditions, economic surplus in this industry equals consumer surplus plus producer surplus. Under monopoly conditions, some consumer surplus is transferred to producer surplus, but economic surplus is the same as it was under perfectly competitive conditions.
Which of the following statements about wages and the quantity of labor supplied is true?
a. The higher the wage rate, the lower quantity of labor supplied will be. b. Wages and quantity of labor supplied have a negative relationship. c. As the wage rate increases, the quantity of labor supplied increases. d. A decrease in the wage rate leads to an increase in the labor supplied.