Business & Marketing Essential

As resources are shifted from one industry to another this can be shown by

a movement along the production possibility frontier

A production possibilities curve shows the various combinations of output

an economy can produce

Economic growth can be shown by

an outward shift of the production possibility frontier

Inward shifts in the production-possibilities curve represents economic growth

false

Opportunity cost represents the worst of the various alternatives that must be given up when a choice is made in context of scarcity

false

In a free market the combination of products produced will be determined by

market forces of supply and demand

If an economy is productively efficient

more of one product can only be produced if less of another product is produced

A production possibilities curve is drawn based on which of the following set of assumptions?

resources are fixed and fully employed, and technology advances at the rate of growth of the economy overall

Which of the following reasons might explain why an economy would be operating inside its production possibilities curve (PPC)?

shrinking population has reduced the number of productive workers in the economy, damage to natural resources such as might be caused by deforestation leading to erosion of topsoil has shrunk the land resource, and unemployment or underemployment of labor perhaps due to discrimination against employing workers of a certain race or gender

Combinations of goods outside the production-possibilities curve (PPC) have which of the following characteristics?

they are not attainable given our existing stock of resources and technology

Everything scarce requires a choice, and these choices always involve an opportunity cost

true

Suppose that the alternative uses of an hour of your time in the evening, ranked from best to worst, are (i) study economics, (ii) watch two half-hour sitcoms, (iii) play pool, and (iv) jog around town. You can only choose one activity. What is the opportunity cost of studying economics for one hour, given this information?

watching two half-hour TV sitcoms

If an economy can produce various combinations of food and shelter along a production possibilities curve (PPC), then if we increase the production of housing along the PPC, which of the following is correct?

we must decrease the production of food. this foregone food production represents the opportunity cost of the increase in the shelter

Which of the following best describes the three fundamental economic questions?

what to produce, how to produce, and for whom to produce?

If an economy moves from producing 10 units of A and 4 units of B to producing 7 As and 5Bs, the opportunity cost of the 5th B is

3As