Homework 1

two-dimensional graphs

________ have a horizontal and a vertical axis and are used in economics to illustrate relationships between two economic variables

increasing

________ marginal opportunity cost implies that the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts

fewer goods will be produced for consumption today

according to the production possibilities model, if more resources are allocated to the production of physical and human capital, then what is likely to happen?

a negatively sloped straight line

if opportunity costs are constant, the production possibilities frontier would be graphed as

market

in economics, the term ________ refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade

bowed out

increasing opportunity cost is represented by a ________ production possibilities frontier

determining the additional benefits and the additional costs of that activity

making "how much" decisions involves

a point inside the frontier

the Great Depression of the 1930s, with a large number of workers and factories unemployed, would be represented in a production possibilities frontier by

the points along and inside the production possibility frontier

the attainable production points on a production possibilities frontier are

opportunity cost

the highest-valued alternative that must be given up to engage in an activity is the definition of

unattainable

the points outside the production possibilities frontier are

false

true or false: a decrease in population shifts the production possibilities frontier outwards over time

true

true or false: any output combination along a production possibilities frontier is associated with fully utilized resources

false

true or false: if additional units of a good could be produced at an increasing opportunity cost, the production possibilities frontier would be linear

false

true or false: on a diagram of a production possibilities frontier, economic growth is represented by the slope of the production possibilities frontier

the economy produces only 2 products

what does the production possibilities frontier model assume?