Answer:
Opportunity costs are defined as the additional costs or benefits lost from choosing one activity or investment over another alternative. It is a relative concept because you cannot be 100% sure that the other investments or activities would have yielded a specific gain.
For example, when you calculate the economic cost of starting your own business, you consider your current salary as an opportunity cost. But what happens if you get fired (or the company closes), your opportunity cost would have been $0? Or how can you exactly measure your future salaries? Maybe in a couple of years you get promoted to manager, or maybe not?
The same applies to economies, since the opportunity cost of producing certain tradable goods is not always fixed, it might decrease or increase due to productivity or efficiency changes. But in order to calculate or determine we must include the most probable option.
In microeconomics, a strictly convex production possibilities frontier function must include a combination of both goods. In strict convexity, the second derivative f''(x) ˃ 0, so the PFF curve cannot be straight, it must have a slope.
When we calculate the opportunity costs of PPF, we usually try to determine which product has the lowest opportunity cost, but that is not an interior solution because both goods are not being produced (the curve is not strictly convex). On a strictly convex curve, as you approach the extremes the opportunity cost of producing one good is high, but on the center the opportunity cost is much lower.
Answer:
Option A: consume less than they produce.
Explanation:
Economic Growth is simply defined as how much a country's GDP grows in one year.
GROSS DOMESTIC PRODUCT also known as GDP is said to be the total value of the goods and service that are produced in that country within one year period.
The higher a county's GDP, the better standard of living for the people within the country. It can get better if a country produce more. for a country to have a higher GDP, it must invest in human capital through education and training, it must produce goods that have value to be sold within the country or exported and others.
Answer:
The Internal Rate of Return (IRR) 10,74%
Explanation:
We use excel or a spreadsheet to calculate this ratio. See document attached.
We use a cash flow to solve this problem.
At moment 0 we have the investment cost , in this case $900000. From period 1 to period 5, we have incomes o benefits of $1935000.
At period 5 we have to consider the estimated salvage value of $300000.
Then, we calculate the Net cash flow that is the difference between benefits and cost.
We use all the result (positive and negative) in Net cash flow to get the IRR.
Steve owns a bike store, his total costs are $1.2 million per year. Last year, Steve sold 1,200 bikes. Steve's average total cost was $1,000 per bike.
To solve: take the total costs of $1.2 million and divide it by the number of bikes sold, $1,200
Average total cost = 1,200,000/1,200
Average total cost = $1,000