How can the concepts of opportunity costs, scarcity and choice be illustrated by the production possibilities curve?
What will be an ideal response?
The concept of opportunity cost is illustrated by movements along the production possibilities curve, meaning that producing more of one good necessarily means less production of another good. Scarcity represents a point on the PPC, but being unable to reach points beyond the PPC due to limited resources. Choice is represented by the actual point chosen on the PPC from all the possible production points on the PPC.
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Which of the following is not a member of the Federal Open Market Committee (FOMC)?
A) The entire board of governors B) Five reserve bank presidents C) The chairman of the SEC D) All of the above are members of the FOMC.
Economic models
A) are used to explain how people think. B) are used to explain how people behave. C) are essential representations of the real world. D) are never used for making economic projections or predictions.
By how much does the real, bilateral exchange rate change when the nominal, bilateral exchange rate changes from $1.10/€ to $1.00/€, the U.S. tradable basket from $500 to $600 and the Euro-Area tradable basket from €550 to €580?
a. The real exchange rate rises approximately by 18%. b. The real exchange rate rises approximately by 20%. c. The real exchange rate rises approximately by 3% d. The real exchange rate falls approximately by 3% e. The real exchange rate falls approximately by 20%
Under which of the following scenarios would a park be considered a common resource?
a. Visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables. b. Visitors to the park must pay an admittance fee and frequently all of the picnic tables are in use. c. Visitors can enter the park free of charge and there are always plenty of empty picnic tables. d. Visitors can enter the park free of charge, but frequently all of the picnic tables are in use.