When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? What is the opportunity cost?
What will be an ideal response?
In general, the opportunity cost of increasing the production of one good or service is the forgone production of another good or service. The statement that the opportunity cost of a product increases as more of it is produced applies to production points on the production possibilities frontier. On the production possibilities frontier, resources are fully employed. Hence to increase the production of one good or service, resources must be switched away from the production of another good or service and hence the production of that good or service decreases. And, as more of the first good or service is produced, the opportunity cost of an additional unit becomes larger, so that the opportunity cost increases.
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During the economic crisis of 2008, the Fed acquired the authority to
a. pay interest to commercial banks on their reserves. b. determine the size of the budget deficit or surplus of the Federal Government. c. require the Treasury to print and issue additional currency. d. purchase gold in sufficient amounts to back the U.S. dollar.
Which of the following is not a pillar of the latest base Accord?
A. It includes liquidity requirements in addition to capital requirements B. It supplements capital requirements based on risk-weighted assets with restrictions on leverage C. A revised set of minimum capital requirements D. Uniform international laws for bank regulation