Chapter 2

Where would you plot full employment on a production possibilities frontier if all other resources are being used efficiently?

a point on the PPF

A production possibilities frontier with constant opportunity cost is

a straight downward sloping line

Where is unemployment such that employment is below the full-employment level plotted on a production possibilities frontier?

a point inside the PPF

yearly rainfall is what kind of factor?

exogenous

"Microeconomics is a great class." is what kind of statement

normative

Economists use the concept of ceteris paribus to examine a change in ____________ in a model, while assuming that all other variables remain constant.

one variable

The limiting of one's work to a particular area is referred to as

specialization

What is a decision an Italian restaurant owner makes in the long run?

the decision to stay in business

Suppose workers attend several skill-building workshops, increasing their labor productivity. How is this represented by a production possibilities frontier?

the entire PPF shifts out

The law of increasing opportunity costs states that

the opportunity costs rise as more of the good is produced.