The opportunity cost of an activity means the:
A. amount of money the activity costs.
B. expected gains minus the expected costs of engaging in the activity.
C. expected gains by engaging in the activity.
D. the value of the best alternative that must be sacrificed in order to engage in the activity.
Answer: D
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In the short run ________
A) the more flexible wages and prices are, the more inflation responds to the output gap B) the more sticky wages and prices are, the more difficult to tell the difference between the short run and long run aggregate supply curves C) if wages and prices are sticky, aggregate output is always at its potential level D) all of the above E) none of the above
Maurice Richard loves to play hockey. He would play the minor leagues and the major leagues with equal gusto. Suppose he earned $35,000 playing for the minor league Urbana Tigers and "gets the call" from the Dallas Stars, a major league team. He excitedly tells his wife, an economist, that his wage is now $379,000 (that's the contract he signed) and she informs him that his wage-related rent is
a. $344,000 b. $379,000 c. $35,000 d. $414,000 e. $0 because he signed the "wage" contract