1.For an economy, operating outside the production possibilities frontier: possi
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Question
1.For an economy, operating outside the production possibilities frontier:
possible only when people cooperate with each other.
is caused by inefficient use of resources. If resource use was improved, the economy could move within the production possibilities frontier.
impossible with current resources and technology.
is only possible if we are willing to sacrifice the production of one of the goods.
2.
On a production possibilities frontier:
:
opportunity cost can be illustrated when you have to reduce the production of one good in order to increase the production of some other good.
trade-offs are never required except when an economy is operating inefficiently.
there is no economic cost due to moving from one point on the curve to another point.
a "free-lunch" is illustrated by moving from one spot on the frontier to another one.
2.
When an economy is operating efficiently,
it is possible to increase the production of one good without simultaneously reducing the production of some other good.
it is possible to increase the production of one good only be reducing the production of some other good.
whenever it is operating at a point within the production possibilities frontier.
whenever it is operating at a point outside of the production possibilities frontier.
4.
An economy is operating at an inefficient level when:
it can only produce more of one good by reducing the production of some other good.
it could produce more of both goods simultaneously by rearranging the production technique to be more effective.
we have reached the unattainable point where we are producing outside of the production possibilities frontier.
opportunity cost no longer applies to production choices.
5.
According to the Production Possibilities Frontier::
It is always possible to increase the production of one good without the sacrifice of any other good.
It is never possible to increase the production of one good without the sacrifice of some amount of another good.
I can be possible to increase the production of one good without any sacrifice of any other good if we maintain the same technology and the same resources.
It can be possible to increase production of one good without any sacrifice of another good if we are starting from an inefficient point within the production possibilities frontier.
6.
In economics, the true meaning of cost is:
the amount of money that must be sacrificed whenever you make a purchasing decision.
opportunity cost, or the highest valued alternative that must be sacrificed when you make a choice.
can never include money since that is an unsophisticated view of the matter.
generally not relevant. Most choices do not have a cost, only purchasing decisions do.
7.
which of the following best exemplifies capital:
Fertile farmland
a 6 burner commercial stove in a restaurant
the knowledge gained from completing a college degree in accounting.
fish in the sea being caught in a fisherman's net
8.Which of the following statements are examples of labor except:
a computer programmer debugs a complicated piece of code that permits a computer program to function properly.
a company manager develops a spreadsheet of all of the products of the company with the accompanying profits of each in order to weed out poor performing ones.
a group of church members gather clothes for a clothing drive for the poor in their community.
a mechanic replaces the water pump on a car at the local Ford dealership.
A)possible only when people cooperate with each other.
B)is caused by inefficient use of resources. If resource use was improved, the economy could move within the production possibilities frontier.
C)impossible with current resources and technology.
D)is only possible if we are willing to sacrifice the production of one of the goods.
Explanation / Answer
1. For an economy, operating outside the production possibilities frontier is impossible with the current resources and technology. Hence the correct answer is (C).
2. When an economy is operating efficiently, it is possible to increase the production of one good only be reducing the production of some other good. This is because at all efficient points all the resources are being utilized. So to produce one more unit of a good, some resources have to be shifted from the other good to this good which leads to a fall in production of the other good. Thus, the correct answer is (B).
3. An economy is operating at an inefficient level when it could produce more of both goods simultaneously by rearranging the production technique to be more effective. Efficiency occurs only when no other combination of current resources can lead to higher production of both goods and services. The correct answer is (B).
4. According to the Production Possibilities Frontier, it can be possible to increase production of one good without any sacrifice of another good if we are starting from an inefficient point within the production possibilities frontier. The correct answer is (D).
5. In economics, the true meaning of cost is the opportunity cost or the highest valued alternative that must be sacrificed when you make a choice. The correct answer is (B).
6. Fertile farmland best exemplifies as capital. The correct answer is (A).
7. A group of church members gathering clothes for a clothing drive for the poor in their community is not an example of labor. The correct answer is (C).
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