The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russi

Question

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a cappuccino?

A) 2 1/2 Russian tea cakes
B) 2/5 of a Russian tea cake
C) $2.50
D) $1.00

12. Automobile manufacturers produce a range of automobiles such as sports utility vehicles, luxury sedans, pickup trucks and compact cars. What fundamental economic question are they addressing by making this range of products?

A) How to produce goods that consumers want?
B) Why produce a variety of automobiles?
C) What to produce?
D) Who to produce automobiles for?

13. How are the fundamental economic questions answered in a market economy?

A) The government alone decides the answers.
B) Individuals, firms, and the government interact in markets to decide the answers to these
questions.
C) Households and firms interact in markets to decide the answers to these questions.
D) Large corporations alone decide the answers.

Explanation / Answer

B) 2/5 of a Russian tea cake C A

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