Chapter 2 Pre-test

A change in technology will cause a leftward shift of the production possibility curve for an economy.

FALSE

A production possibility curve shows all possible combinations of goods that an economy can produce given (1) limited number of resources, (2) government intervention, and (3) we have competitive markets.

FALSE

A recession will have no effect on an economy's production possibility curve since the curve is only analyzing two goods and price is not involved.

FALSE

As long as the economy is producing along or inside the production possibility curve, then each combination of goods and resources is being used efficiently.

FALSE

Two reasons for inefficiency outlined in the chapter are underemployment and the concept of "X-inefficiency."

TRUE

The opportunity cost of studying for physics tonight at the library may include

all of the choices are correct.

The production possibilities frontier

is a graphical representation of opportunity cost for a society with only two goods

If the unemployment rate decreases from 10 to 8 percent, the economy will

move closer to the PPF

Which statement concerning opportunity costs is not true

opportunity costs always can be expressed in money.

If you have the choice of consuming either two apples, three oranges, or one candy bar, the opportunity cost of the candy bar is

two apples and three oranges, whichever you prefer.