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answerstohomework1spring2007 - Economics 102 Answers to...

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Economics 102 Answers to Homework #1 Spring 2007 Due 02/06/2007 in lecture Directions: The homework will be collected in a box before the lecture. Please place your name , TA name and section number on top of the homework (legibly). Make sure you write your name as it appears on your ID so that you can receive the correct grade. Please remember the section number for the section you are registered in, because you will need that number when you submit exams and homework. Late homework will not be accepted so make plans ahead of time. Good luck! 1. (a) False. To measure the opportunity cost of doing something, we need to include the lost earnings that we would have been able to obtain if we had not done that action. (b) True. For example, we can say that “The opportunity cost of producing one apple is 2 gallons of milk.” (c) False. If Mercel didn’t live in the house and lent it out to somebody else instead, he would have obtained a rent payment. This is the opportunity cost of using the house for himself.
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