Exam 2: Scarcity, Trade-Offs, and Production Possibilities

How does a "command economy" compare to a "market economy"?

FIGURE 2-3 -Refer to Figure 2-3. At which point is the opportunity cost of one more unit of a capital good greater?

FIGURE 2-4 -Refer to Figure 2-4. If the economy chooses to shift more of its resources into clothing, what will it have to give up?

Market economies are often criticized for how they answer the basic question, "For whom are goods produced?" This criticism usually comes from people who believe that the distribution of income is not "fair." Is there some way to separate production from distribution so that we can make the distribution of income "more fair" without interfering with production?

An improvement in technology will tend to cause a society's production possibilities curve to shift outward.

How can a decrease in the unemployment rate from 21 percent to 17 percent be illustrated?

What will occur when a command economy is utilized to resolve economic questions regarding the allocation of resources?

FIGURE 2-1 -Refer to Figure 2-1. What does the arrow from the firms to the factor markets represent?

FIGURE 2-12 -Refer to Figure 2-12. Which of the following would most likely cause the production possibilities curve for breadfruit and fish to shift from AA to BB?

Which of the following is the most accurate statement about a production possibilities curve?

FIGURE 2-3 -Refer to Figure 2-3. Which of the following movements will result in an increase in the quantity of both capital and consumption goods produced this period?

When does the law of increasing opportunity costs apply?

FIGURE 2-4 -Refer to Figure 2-4. Which of the following points corresponds to an economy experiencing significant unemployment and/or producing inefficiently?

When you buy groceries at your local supermarket, you are making a transaction in the product market.

What does the law of increasing opportunity costs imply?

An economy is producing two goods, ice cream and cookies, and is currently operating efficiently. Under what circumstances can this economy produce more cookies?

Capital-intensive production techniques tend to be utilized most commonly in countries where labour is relatively cheap.

Which of the following best characterizes the circular flow of income?

Which of the following best illustrates inefficiency?

Which of the following describes why an economy's production possibility curve is "bowed" outward?