Explain how each of the following could discourage economic growth:
a. The government closes all of the schools so that more people will be available for work.
b. The country fears military invasion and spends half of its income on military goods.
Economic growth depends on a country's willingness to sacrifice current consumption and invest in physical and/or human capital goods. Expanding the country's capital stock or improving the quality of its labor force allows it to produce more goods and services. Closing all of the schools will mean sacrificing investment in human capital in favor of current consumption. Likewise, choosing to spend half of available income on military goods will leave fewer resources for investment in nonmilitary physical or human capital.
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Suppose Slow Ketchup requires that, as a condition of purchase, all restaurants using its product must buy and make available its new sales product. This arrangement is an example of:
A. price-fixing. B. an interlocking directive. C. a tying contract. D. price discrimination.
Which of these is NOT an example of opportunity cost?
A. Lobster catchers in Point Judith, Rhode Island continued to trap lobsters at the cost of depleting the lobster population. B. President George W. Bush's administration has pushed for oil exploration in the Arctic National Wildlife Refuge in Alaska at the cost of environmental preservation. C. Lobster catchers in Port Lincoln, Australia paid a licensing fee for the right to own lobster traps. D. The "bridge to nowhere" to be built near Anchorage, Alaska comes at the cost of adding to the federal budget deficit.