Question

1. Twenty One Pilots records an album. When determining all the costs to produce the album, they are likely to forget to calculate opportunity costs. Which is an example of an opportunity cost?

1. The cost of paying for studio time
2. The cost of hiring a producer
3. The cost of marketing the album
4. The acting role they had to pass up to write lyrics
5. All of the above

2. Which of the following is an example of a price floor?

1. A quota on goods from China
2. A cap of the maximum price that landlords can charge for rent
3. A minimum wage
4. A government subsidy
5. None of the above  

3. What is the most important economic signal that conveys information about other people’s cost and willingness to pay?

1. The quantity of goods bought and sold
2. The loss and gain of total surplus
3. GDP growth
4. Price
5. None of the above

4. Robert De Niro moves to Canada because he expects price ceilings to provide cheap apartments. When he arrives, he realizes that he has to pay the landlord thousands of dollars in cash just to tour an open apartment. In this example, what type of inefficiency did he not consider before moving?

1. Inefficient allocation to consumers
2. Low quality
3. Wasted resources
4. Low quantity
5. Black markets/illegal activity

Answer 1

1 (D) The acting role they had to pass up to write lyrics

when they have to leave the acting role in order to write lyrics so opportunity cost of writing lyrics is acting role that they left.

2. (C) minimum wage

it is the wage that is paid over and above the market price is given to labor and is decided by government to regulate the market for labor.

3. (D) Price

most important economic signal that conveys information about other people’s cost and willingness to pay is price as price is amount that producer will charge to cover cost and consumer will pay or willing to pay to get product.

4. (A) inefficient allocation to consumer

as people are paying less rent in different area,Robert De Niro showing his paying capacity in terms of rent but we find that there are also other area where rent is quite low and bearable so this represents the inefficient allocation to consumer.