President Barack Obama pushed forward a national health care plan to increase the availability of medical care for all Americans. How would one determine the opportunity cost of the proposal?
Every decision by government has an opportunity cost, as would any decision made by consumers or businesses. One would have to determine the best forgone alternative, be it national defense, a space station, the Superconducting Super Collider, the environment, or a tax cut. Each of these has a "value," even if it is hard to put a price tag on it. Clearly, determining the opportunity cost of such a complex decision is not easy in practice.
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Determine the output expansion path (equation) for a Cobb-Douglas production function f(L,K) = 10LaK1-a. How does the shape of the output expansion path change as "a" changes?
What will be an ideal response?
In order to maximize social welfare, a firm's production of a good should occur at the output where
A. Social marginal cost equals social marginal benefit. B. Price equals social marginal revenue. C. All pollution is entirely eliminated. D. Marginal revenue equals price.