How are money cost and opportunity cost related to each other?
A. If markets function well, they are closely related.
B. They are always identical in any economic system.
C. Opportunity cost must always exceed money cost.
D. Money cost is greater than or equal to opportunity cost.
E. In a market economy, they must be equal to each other.
Answer: A
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In the long run, a perfectly competitive market will
A) produce only the quantity of output that yields a long-run profit for the typical firm. B) generate a long-run equilibrium where the typical firm operates at a loss. C) supply whatever amount consumers demand at a price determined by the minimum point on the typical firm's average total cost curve. D) supply whatever amount consumers will buy at a price which earns the market an economic profit.
Which of the following is not a reason for the Ricardian equivalence theorem to fail to hold?
A) tax distortions B) people can borrow from the government. C) finite-lived people. D) credit market imperfections.