6. The term \"ceteris paribus\" means there ain\'t no such thing as a free lunch

Question

6. The term "ceteris paribus" means there ain't no such thing as a free lunch holding everything else constant rational or economic man keep it simple the willingness to bear the risks of production a. d. e. Use the following graph to answer questions 7 through 9. Shirts 175 160 100 Radios 50 60 70 7. Which point represents an efficient use of resources? b. . d. both A and E 8 Moving from point A to point B, the per unit opportunity cost of producing arn additional radio is a. 160 radios b 50 radios c. 15shirts d 0.3 shirts 160 shirts Assume a country is producing at point B. Then, a new way to weave cloth is discovered, shifting the shirts intercept to 220. After the shift, and assuming efficiency, the country could produce a. more shirts, but not more radios b. more radios, but not more shirts c. more of both goods 9. d. the same quantity of both goods, no more, no less

Explanation / Answer

Cetris Paribus is a Latin phrase which means Other things equal.

Option B. Is correct.

7. The points which lies on the production possibility frontier are efficient such as Point A, B, C and F are efficient.

Option A is correct.

Point D and E are inefficient.

8. At point A

Number of shirts produced = 175

Number of Radios = 0

At point B

Number of shirts = 160

Number of radios = 50

Therefore, 15 shirts = 50 radios

1 radio = 0.3 shirt

Thus the opportunity cost of producing per unit of radio is 0.3 shirt.

Option C is correct.

9. With the new technology the productivity of producing shirt will increase but it will not have any impact on production of radio.

Change in technology will shift the PPF. Thus, more shirts will be produced but no change in Radio.

Option A is correct.

All were correct except question 9.

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