Smith and Jones Comprise a Two-Person Economy

question 111

Multiple Choice

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below.

-The opportunity cost of an extra calculator for Smith is __________ and for Jones it is __________.

• A) 0.10 computers;0.05 computers
• B) 10 computers;6 computers
• C) 1 computer;0.5 computers
• D) 0.6 computers;1.2 computers
• E) 0.05 computers;0.10 computers

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Definitions:

Nominal Rate

The rate of interest before adjustments for inflation, representing the face value of financial products.

Large-company Stocks

Shares that represent ownership in corporations with large market capitalizations.

Risk Premium

The extra return expected by investors for holding a risky asset compared to a risk-free asset, compensating for the additional risk.

Total Return

The complete return on an investment over a specified period, including both capital gains and income received.