An understanding of opportunity costs is important to understanding:
a. how to calculate the total revenue generated by a firm.
b. how to assess the economic profitability of a firm.
c. How to calculate the tax liability of a firm.
d. how accountants calculate accounting profits.
QUESTION 2Getting the work done by some other firm at lower costs, when the firm is situated in some other country, is called outsourcing.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3When the income elasticity of demand for a good is negative, the good is called a luxury good.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4An example of an implicit cost of production is:
a. the cost of leather used in manufacturing furniture.
b. the opportunity cost of space in your home that is used for a home office.
c. the wages paid to high school students that work in a fast-food restaurant.
d. none of the above.
QUESTION 5People tend to remain in those occupations that require continuous time and financial commitments to remain productive.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6The cross-price elasticity between baseballs and tennis balls is likely to be a large positive number.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 7An example of an implicit cost of production is:
a. the cost of raw materials used to produce bread in a bakery.
b. the cost of labor in a factory that assembles DVD players.
c. the income an entrepreneur could have earned working for someone else.
d. all of the above.
QUESTION 8The greater the opportunity cost of any particular occupation, the smaller the number of people who will select that occupation.
a. True
b. False
Indicate whether the statement is true or false
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