Introductory Concepts and the Production Possibilities Curve

Positive economics is based on

"What is" - that is, facts and cause-and-effect relationships

Which of the following is not capital good?

*a. A bank account b. A machine tool c. A factory building d. A farmer's truck

The U.S. production possibilities curve will shift outward if

Additional resources are discovered in the United States

An outward shift in production possibilities curve could be the result of all of the following

An increase in the economy's supplies of land, labor, and capital An improvement in the technology of food production An increase in the economy's rate of capital formation An improvement in technology of clothing production

Suppose the average workweek is shortened from 40 to 30 hours. This by itself will tend to cause:

An inward shift in the production possibilities curve

Which of the points in Figure 1 corresponds to a situation in which the economy's resources are underemployed?

C

If a nation's production possibilities schedule a straight line, it would be characterized by

Constant opportunity costs

Economic sanctions levied against a target country are intended to cause the

Country to move to a point inside of its production possibilities curve

Figure 1 shows a production possibilities curve for a simple economy which produces only guns and butter. Which of the points labeled in the diagram is unattainable?

D

The factors of production include all of the following

Entrepreneurship Capital Labor and Land

The United States will move from a point on its production possibilities curve to a point inside the curve if there is an

Increase in unemployment rate

A production possibilities curve that is bowed outward illustrates

Increasing opportunity costs

If the slope of a straight line is -2, then the two variables in the graph are

Inversely related

The economic problem is one of deciding how to make the best use of

Limited resources to satisfy virtually unlimited wants

According to the economic perspective, planners would choose to construct additional seats at a football stadium if the

Marginal benefit of the additional seats exceeded their marginal cost

The subject of macroeconomics would be most concerned with how

National output and employment respond to changes in government spending

If a nation's production possibilities schedule is a straight line, it would be due to

Resources being equally efficient in producing every good

In a graph showing study time and grades in an economic course

Study time is the independent variable and grades are the dependent variable

The production possibilities curve in Figure 1 is concave (bowed outward) because:

The economy's resources of production are not all equally well adapted for the production of both guns and butter

Assuming that the economy is always operating on its production possibilities curve... The larger the share of the economy's productive resources which are allocated to the production of capital goods:

The larger the production frontier of the economy is likely to shift outward over time

Assuming that the economy is always operating on its production possibilities curve... The more of the economy's output which one person gets:

The less is available for the rest of the people in the economy

Assuming that the economy is always operating on its production possibilities curve... The larger the share of the economy' resources that are allocated to the production of capital goods

The smaller must be the current output of consumption of goods

Assuming that the economy is always operating on its production possibilities curve... The larger the share of the economy's resources which are allocated to the production of agricultural commodities:

The smaller must be the economy's current output of nonagricultural goods

As a subject matter, economics is most concerned with

The study of choice under conditions of scarcity

Normative economics is based on

Value judgments about what "ought to be"

Positive economics is concerned with all of the following questions

Why do engineers earn more than librarians? Do import tariffs protect the jobs of domestic workers? Will reducing income taxes cause households to work additional hours?

To an economist, which of the following represents investment?

a. Purchase of a share of General Motors *b. Construction of an apartment building c. Purchase of a ten-year-old factory building d. Purchase of 180 acres of land e. Purchase of bonds issued by General Electric, Inc