You own a building that has four possible uses: a cafe, a craft store, a hardware store, and a bookstore. The value of the building in each use is $2,000; $3,000; $4,000; and $5,000, respectively. You decide to open a hardware store. The opportunity cost of using this building for a hardware store is
A. $3,000, the value if the building is used as a craft store.
B. $2,000, the value if the building is used as a cafe.
C. $10,000, the sum of the values if the building is used for a cafe, a craft store, or a bookstore.
D. $5,000, the value if you rented the building to someone else to use as a bookstore.
Answer: D
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If we start from long-run general equilibrium of goods, forex, and the money markets, and there is a temporary expansion of the money supply, what will be the outcome?
A) GDP rises, the interest rate falls, and the exchange rate rises (depreciation). B) GDP rises, the interest rate rises, and the exchange rate falls (appreciation). C) GDP falls, the interest rate falls, and the exchange rate rises (depreciation). D) GDP falls, the interest rate rises, and the exchange rate rises (depreciation).
Phil found that as he continued to crowd laborers into his hot dog stand, the extra output he was receiving from each additional laborer was beginning to fall off. This is an example of the
A) law of increasing opportunities. B) law of demand. C) law of diminishing marginal utility. D) law of diminishing product.