A production possibility frontier illustrates the ________ facing an economy tha

Question

A production possibility frontier illustrates the ________ facing an economy that ________ only two goods.
1

Marks: 1
The incentives built into the market economy ensure that resources are put to good use and that opportunities to make people better off are not wasted. This means that:
Choose one answer.
a. people usually exploit opportunities to make themselves better off.
b. markets move toward equilibrium.
c. resources should be used as efficiently as possible to achieve society's goals.
d. markets usually lead to efficiency.

2

Marks: 1
A college student is faced with a difficult decision of how to spend one hour tonight. She could babysit her professor's child at an hourly wage of $7, she could work at the college library at a wage of $6, or she could finish her economics homework assignment. If she chooses to complete her homework assignment, she has incurred an opportunity cost equal to:
Choose one answer.
a. $7.
b. $6.
c. $13.
d. $0.

3

Marks: 1
Your local health club is offering a free one-year membership for the person who attends the most yoga classes in March. This results in more people attending yoga. This statement best represents the economic concept of:
Choose one answer.
a. the real cost of something is what you must give up to get it.
b. people usually exploit opportunities to make themselves better off.
c. there are gains from trade.
d. markets move toward equilibrium.

4 Marks: 1

An example of a positive statement is:
Choose one answer.
a. the rate of unemployment is 4%.
b. a high rate of economic growth is good for the country.
c. everyone in the country needs to be covered by national health insurance.
d. baseball players should not be paid higher salaries than the president of the United States.

Explanation / Answer

A production possibility frontier illustrates the __ output combinations ______ facing an economy that __can allocate its resources in producing______ only two goods. 1 Marks: 1 The incentives built into the market economy ensure that resources are put to good use and that opportunities to make people better off are not wasted. This means that: Choose one answer. a. people usually exploit opportunities to make themselves better off. When individually every one thinks or operates at their efficient level based on the opportunity costs, than the overall economy's allocations will be efficeent, this is also called an invisible hand which drives the economy to efficiency. 2 Marks: 1 A college student is faced with a difficult decision of how to spend one hour tonight. She could babysit her professor's child at an hourly wage of $7, she could work at the college library at a wage of $6, or she could finish her economics homework assignment. If she chooses to complete her homework assignment, she has incurred an opportunity cost equal to: Choose one answer. a. $7. Opportunity cost is the next best alternative which is foregone or traded off. 3 Marks: 1 Your local health club is offering a free one-year membership for the person who attends the most yoga classes in March. This results in more people attending yoga. This statement best represents the economic concept of: Choose one answer. d. markets move toward equilibrium. people react to incentives, this makes the market to move towards equilibrium by allocating the resources, which gives a higher payoff 4 Marks: 1 An example of a positive statement is: Choose one answer. a. the rate of unemployment is 4%. Positive statement is descriptive, it describes the situation as it is. Normative statement is an expression of ones opinion. all the remaining optins are normative, they exprees the opinions b. a high rate of economic growth is good for the country. c. everyone in the country needs to be covered by national health insurance. d. baseball players should not be paid higher salaries than the president of the United States.

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