3) A production possibilities curve A) defines a boundary between what is needed

Question

3) A production possibilities curve A) defines a boundary between what is needed and what is not needed. B) involves a tradeoff between what is wanted and what is needed. C) shows combinations of two goods or services that are attainable with given resources D) identifies the combination of two goods or services that should be produced 4)Opportunity cost is best defined as A) a situation in which one individual cannot have an absolute advantage over another individual in the production of all goods. B) the amount of money that an individual is willing to pay to purchase a good that meansa great deal to that person. C) the highest-valued alternative that is forgone when choosing among various alternatives. D) the amount of money lost by one individual in an exchange process so that another individual might gain. 5) All of the following statements are true except 5) A) The theory of demand and supply is concerned with adjustments in relative prices. B) The relative price of a good can be calculated by multiplying its money price by a price index C) Relative prices are determined in markets. D) A relative price is an opportunity cost 6) The "income effect" in the market for aspirin means that A) aspirin are generally taken by people with higher than average incomes B) an increase in the price of aspirin will cause headache sufferers to look for a lower priced C) a decrease in the price of a substitute god like acetaminophen will make aspirin D) an increase in the price of aspirin will reduce the total purchasing power of aspirin takers, remedy little poorer than they were before. making them able to afford fewer aspirin 7) If the price of an apple increases from 50e to 60c, the quantity demanded will decrease because of ) A) a change in income. C) the substitution effect only B) the income effect only D) the substitution and income effects.

Explanation / Answer

3) c) Shows combination of two goods and services that are attainable with given resources.

4) d) the amount of money lost by one individual in an exchange process so that another individual might gain. A benefit, profit, or value of something that must be given up to acquire or achieve something else.

5) A) The theory of demand and supply is concerned with adjustments in relative price.

6) D) Since income effect is the change in demand of a good or service brought on by a change in a consumer's discretionary income.

7) c) the substitution effects only.

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