Jack and Jill both decide to go to a movie with free tickets. We know that
A. the cost of going to the movie is greater for the one who had more choices to do other things.
B. neither bears an opportunity cost because the tickets were free.
C. both bear the same opportunity cost since they are doing the same thing.
D. both bear an opportunity cost since they could have done other things instead of watching a movie
Answer: D
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Conflicts of interest are a type of ________ problem that can happen when an institution provides multiple services
A) adverse selection B) free-riding C) discounting D) moral hazard
The basic purpose of imposing legal reserve requirements on commercial banks is to:
A. Assure the liquidity of commercial banks B. Provide a device through which the credit-creating activities of banks can be controlled C. Provide a proper ratio between earning and no earning bank assets D. Provide the central banks with necessary working capital