Assuming That Resources Are Specialized, the Opportunity Cost of an Item

question 194

Multiple Choice

Assuming that resources are specialized, the opportunity cost of an item increases as production of it rises.Therefore, we expect that firms will produce more if

• A)the price increases.
• B)the price decreases.
• C)the opportunity cost is greater than the price.
• D)government asks firms to produce more.
• E)the income of buyers increases.

---

Definitions:

Swap Contract

A swap contract is a financial derivative agreement between two parties to exchange sequences of cash flows for a set period of time.

Specified Cash Flows

Designated or pre-determined amounts of cash inflow or outflow expected to occur on specific dates in the future.

Specified Intervals

Predetermined or agreed periods at which certain actions are taken or conditions are reviewed, often used in finance with payments or interest calculations.

Call Option

A financial agreement that grants the purchaser the option to acquire an asset at a predetermined price during a defined period, without being obligated to do so.