Why might the money price for something be higher than the opportunity cost? Why might it be lower? Give an example of each to illustrate your answer.
What will be an ideal response?
Money price can be higher than opportunity cost if the good or service has no alternative use. An example might be hiring unemployed persons to perform labor. Because the next best use of the labor has zero monetary value, the money cost of the task is above the opportunity cost. The opportunity cost can be higher than the money price if one ignores implicit costs, e.g., time, in computing cost. One example is the opportunity cost of attending college.
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The above figure shows supply and demand curves for milk. If amount Q2 is produced in the market,
A) producer surplus is maximized. B) consumer surplus is minimized. C) a deadweight loss is generated. D) All of the above.
An example of organizational architecture based on the different functions of a firm is when divisions are defined as
a. R&D, Engineering, Production, Marketing, Sales b. Component 1 Plant, Component 2 Plant, Component 3 Plant, Final Assembly c. Store 1, Store 2, Store 3, Region A, Region B, Sales Division d. Business Customers, Educational Customers, Household Customers