Author Question: Both an NBA basketball player and a fast-food cook are going to graduate school. Who has a higher ... (Read 67 times)

meagbuch · **on:** Jun 29, 2018

Both an NBA basketball player and a fast-food cook are going to graduate school. Who has a higher opportunity cost? Explain.

What will be an ideal response?

Question 2

In the above figure, market equilibrium at point E yields the quantity X. The quantity X is socially optimal amount. The government can achieve the optimal outcome by

A) setting the price at P1.
B) establishing a tax of P3 - P1 per unit of the good sold.
C) establishing a tax of P3 - P2 per unit of the good sold.
D) setting the price at P4.

lorealeza77 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The opportunity cost is the income lost while going to graduate school. An NBA basketball player typically earns much more than does a fast-food cook so that the opportunity cost of going to graduate school is likely to be higher for the NBA basketball player than for the fast-food cook.

Answer to Question 2

B