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

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

What does the law of increasing opportunity costs imply?

FIGURE 2-3 -Refer to Figure 2-3.Considering only points on the frontier,at what point will the economy experience the least amount of economic growth over time (ceteris paribus)?

If the production possibilities curve is a straight line,what does this illustrate?

FIGURE 2-8 -Refer to Figure 2-8.In order for the economy to move from Point B to Point E at a given point in time,what would it have to do?

FIGURE 2-11 -Refer to Figure 2-11.Which of the following could make Point Q attainable in the above production possibilities diagram?

How can we measure the opportunity cost of producing a good? Using a bowed outward production possibilities curve between ice cream and hammers,identify graphically the opportunity cost of obtaining an additional hammer.

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

What does the concavity (bowed-out shape)of the production possibilities curve result from?

What does the production possibilities curve illustrate?

What does the use of large amounts of labour relative to capital in an economy indicate?

Which of the following statements about a production possibilities curve that is "bowed out" or concave to the origin is the most accurate?

FIGURE 2-12 -Refer to Figure 2-12.Which of the following statements about a movement from Point D to Point A is the most accurate?

What effect will improving the level of education of the labour force have on the production possibilities curve?

An economy that has many unemployed workers and idle factories is not operating efficiently.

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

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

FIGURE 2-3 -Refer to Figure 2-3.Which of the following movements will result in an increase in the production of capital goods but a decrease in the production of consumption goods this period?

Consider a production possibilities curve for an economy producing bicycles and video game players.Under what circumstances is it possible to increase the production of bicycles without sacrificing video game players?

FIGURE 2-2 -Refer to Figure 2-2.Which of the following statements about a movement from Point C to Point B is the most accurate?