Opportunity cost is defined as the
A) total value of all the alternatives given up
B) highest-valued alternative given up
C) cost of not doing all of the things you would like to do.
D) lowest-valued alternative given up
B
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When the price elasticity of demand for a good equals
A) 0, the demand curve is vertical. B) 0, the demand curve is horizontal. C) 1, the demand curve is vertical. D) 1, the demand curve is horizontal.
On August 5, 2003, a tragic fire destroyed a large Jim Beam whiskey factory in Kentucky. Assume that the U.S. market for whiskey is perfectly competitive, and that the market was originally in long run equilibrium. What would be the effects of such an incident?
a. An increase in supply would cause a reduction in price, which would then lead to entry of firms. b. A decrease in supply would cause an increase in price, which would then lead to entry of firms.` c. An increase in supply would cause an increase in price, which would then lead to entry of firms d. A decrease in supply would cause an increase in price, which would then lead to exit of firms. e. Price of the whiskey would remain unchanged and the existing firms would continue to earn zero economic profit.