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

What does a linear (straight line)production possibilities curve illustrate?

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?

FIGURE 2-8 -Refer to Figure 2-8.In order to move from Point B to Point C,what will the economy have to give up?

FIGURE 2-4 -Refer to Figure 2-4.For this economy,what is the most preferred point to produce at?

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

The law of increasing opportunity costs implies that a society's production possibilities curve will be a straight line.

Along a production possibilities curve that is concave to the origin,what happens to the opportunity cost of production of the good on the X-axis as we move down along the curve?

Which one of the following will cause the production possibilities curve to shift outward?

FIGURE 2-2 -Refer to Figure 2-2.Which of the following statements best describes the opportunity cost of producing an additional cake?

Consumer sovereignty means that consumers vote with their dollars in a market economy,which helps determine what is produced.

An increase in available resources will tend to cause a society's production possibilities curve to shift inward.

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

Which of the following best characterizes the circular flow model?

How might an increase in the unemployment rate from 15 percent to 20 percent be illustrated?

Using the production possibilities curve,which of the following illustrates an inefficient use of resources?

Which of the following is an illustration of the concept of opportunity cost?

Which of the following will shift a production possibilities curve outward?

FIGURE 2-9 -Refer to Figure 2-9.If Points A and B indicate consumption and investment for two different economies,other things held constant,which of the following statements about the growth of the economies is most accurate?

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?

Why is a production possibilities curve negatively sloped?