Which of the following is an assumption made while constructing a production possibilities frontier [PPF]?
a. Dynamic technological know-how
b. Flexible resource quality
c. Fixed resource quantity
d. Full and efficient use of resources
e. Flexible money supply
d
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Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. When trade opens up, the United States should produce:
A. both goods, since they have an absolute advantage in both goods, and not trade. B. only shoes, since they have a comparative advantage in the production of shoes, and not trade. C. apples, since they have a comparative advantage in the production of apples, and not trade. D. only apples, since they have a comparative advantage in the production of apples, and trade for shoes.
External costs are modeled by creating a new social cost curve that is
A. higher than the original supply curve. B. lower than the original demand curve. C. higher than the original demand curve. D. lower than the original supply curve.
Transfer payments are income that is
a. earned but not received. b. received but not spent. c. spent but not earned. d. received but not earned.
Of the collection of supply and demand diagrams in Figure 2.2, which one shows the result of an increase in the number of sellers in the market for anything?
A. Figure 1 B. Figure 2 C. Figure 3 D. Figure 4