Which of the following is correct concerning opportunity cost?
a. Except to the extent that you pay more for them, opportunity costs should not include the cost of things you would have purchased anyway.
b. To compute opportunity costs, you should subtract benefits from costs.
c. Opportunity costs and the idea of trade-offs are not closely related.
d. Rational people should compare various options without considering opportunity costs.
a
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Critics of active monetary and fiscal policy emphasize
a. that policy affects the economy with a lag and our ability to forecast future economic conditions is poor. b. "leaning against the wind" of economic change to stabilize the economy. c. cutting government spending, raising taxes, and reducing the money supply when aggregate demand is excessive. d. boosting government spending, lowering taxes, and increasing the money supply when aggregate demand is low.
Brinley puts on an art show in a public space, asking for donations based on how much people enjoy his work. Economists would expect that:
a. people will understate their enjoyment of the art in order to "free ride." b. people will overstate their enjoyment of the art, attempting to substitute praise for money. c. people will accurately state their level of enjoyment and pay accordingly. d. Brinley will reap significant economic profits from the event.