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.

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Definitions:

Company Profit

The financial surplus generated by a company after all operating expenses, including production costs, taxes, and overheads, have been deducted from total revenue.

Fare

A price paid for transportation.

Trade-ins

A sales transaction where a customer exchanges an old item as partial payment for a new one, common in the automotive and electronics industries.

Allowances

Sums of money given regularly for a specific purpose, often by parents to their children, or allocations in budgeting and financial planning.