A car dealership union negotiates a contract that dramatically increases all salesmen's salaries. If one of the salesman is thinking of changing careers to be a hardware salesman, his opportunity cost
a. would not be affected
b. of becoming a hardware salesman would decrease
c. of becoming a hardware salesman would increase
d. none of the above
c
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Acme Widget tells investors it wants to build a new widget factory and sell investors $10,000,000 in bonds to finance it
Once they have raised the $10,000,000 the owners of Acme Widget use the funds to finance a trip to Atlantic City to try out a new scheme they have devised to win at blackjack. This is an example of A) the adverse selection problem in financial markets. B) the moral hazard problem in financial markets. C) the difficulty lenders have in distinguishing good from lemon firms. D) the problems with using rational expectations in financial markets.
How did the actions the Fed took on interest rates in 2005–2006 affect people with adjustable-rate mortgages?
a. Their payments decreased. b. Their payments increased. c. The government assumed their payments. d. Their payments could not be changed.