ID: Table 2-1 Peanuts Bushels) Bushels Corn 10 20 30 40 50 42 28 Suppose a farme
ID: 1140966 • Letter: I
Question
ID: Table 2-1 Peanuts Bushels) Bushels Corn 10 20 30 40 50 42 28 Suppose a farmer produces 50 bushels of corn and 10 bushels of peanuts. According to Table 2-1, the opportunity cost of 10 more bushels of peanuts is a. 8 bushels of corn. b. 42 bushels of corn. c. 50 bushels of corn. d. impossible to determine from the information given. 15. Figure 3-1 P 1.000 ) If the government has stated that it will pay whatever it must to obtain 1,000 units of good X, which demand curve in Figure 3-1 is appropriate? 16. b. 2 d. 4 Opportunity cost can best be defined as the a money cost of a good or service. b. money cost plus interest on money borrowed to buy a good or service. c. cost of the resources used to produce a good or service. d. value of the best alternative forgone when the alternative at hand is chosen. Suppose the numbers in parentheses represent two points on a line: (59 billion quarts; $4) and (78 billion quarts; S6). The line is likely a a. production possibilities frontier for milk b. supply curve for milk. c. demand curve for milk d. ray through the origin. e. time series line. 17. 18.Explanation / Answer
15) Opportunity cost = loss of choosing one alternative over the other
So opportunity cost of 10 more bushels of peanuts is 8 bushels (50-42) of corn sacrificed for producing 20 bushels of peanuts. (Option a)
16) If the government has stated that it will pay whatever it must to obtain 1000 units of good X, then it means demand is perfectly inelastic and demand curve of Figure 3-1, 2 is appropriate. (option b)
17) Opportunity can be best defined value of the best alternative forgone when the alternative at hand is chosen. (Option d)
18) With increase in price from $4 to $6, the quantity also increases from 59 billion quarts to 78 billion quarts, thus the line shows the supply curve for milk as supply curve shows positive relation between price and quantity supplied. (Option b)