A worker will become indifferent between spending the next hour on work or leisure if the benefit of another hour of work is:
A. greater than the opportunity cost.
B. exactly equal to the opportunity cost.
C. less than the opportunity cost.
D. constant for each additional hour worked.
B. exactly equal to the opportunity cost.
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The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource. To correct for this problem, the town could
a. allow individual shepherds to choose their own flock sizes. b. internalize the externality by subsidizing the production of sheep's wool. c. auction off a limited number of sheep-grazing permits. d. wait until the market corrects the problem.
The rational expectations school of thought argues that people form expectations based on:
a. all available information. b. only on information they believe to be "insider" information. c. their own instincts. d. only past information and experience.