Opportunity Cost of The Skiing Vacation project
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- During the winter break, Sam decides to go for a skiing vacation in Aspen instead of taking piano lessons. The opportunity cost of the skiing vacation is the:
cost of accommodation and food in Aspen.
value of piano lessons.
cost of buying a piano.
amount paid to the skiing instructor.
- Which of the following is an example of a negative externality?
Smith reducing the consumption of imported wine following an increase in the price of imported wine
Phoebe refusing to contribute to the building of a children’s park in her neighborhood
Christina accepting a payment in cash rather than in check for her laundry services
Tom playing music loudly in his room, disturbing his roommate who has an exam the next day
- A perfectly competitive firm sells 10 units of Good X at a price of $2 per unit. It incurs a fixed cost of $5 and a variable cost of $40 to produce the good. Which of the following is true?
The firm should operate in the short run but shut down in the long run.
The marginal cost of the good is $4.
The average revenue of the firm is $20.
The firm should shut down.
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