Question

You face three mutually exclusive options for next summer:

Option A: Work 40 hours a week at the local WalMart and earn $3,500 dollars.

Option B: Work only 30 hours a week at a local restaurant and earn $2,500 dollars. The ten hours per week of additional leisure (compared to a 40-hour work week) are worth a total of $800 to you.

Option C: Work 50 hours a week at McDonald’s and earn $4,000. The ten hours per week of sacrificed leisure (compared to a 40-hour work week) are worth a total of $800 to you.

What is the opportunity cost of choosing option A?

		$500 - the discrepancy between the monetary benefits of option A and the monetary benefits of option C
		$3,300 – the net benefits of the most highly valued alternative necessarily sacrificed.
		$6,500 – the sum of the net benefits of options B and C
		$4,000 – the monetary gain of option C. Only money counts in economics.

Resources are categorized into three broad categories: Land, Labor, and Capital. Capital is subdivided into physical and human capital. Determine which category each of the following examples belongs in:

The knowledge embodied in a brain surgeon The time a brain surgeon devotes to an operation. The money loaned to an entrepreneur to enable her to start a business. A big fat oil deposit discovered when your parents dig a well in your backyard. The snow plow used by the City of Pullman to make the roads passable after a snow storm. The time the clerk at the Department of Motor Vehicles devotes to processing the paperwork you were required to submit when you sold your car. A. Land B. Labor C. Physical capital. D. Not a resource E. human capital

Answer 1

B is right answer because oppurtunity cost considers only the best alternative. Note 4000-800=3200 only

2 it is human capital since knowledge is always human capital

B it is labour. How much one works for what wage rate or income

C money is not a resource but only medium of exchange and store of value

D oil wells are considered as natural resources seperately but more generally as land

E it is machinery and thus physical capital

F labor s labour is hired for this jo