Using your own words, describe the law of increasing opportunity costs. Be sure to explain why this phenomenon occurs and how it helps to contribute to the shape of the production possibilities frontier
People (and other resources) have varying abilities when it comes to producing a given product which results in a non-constant opportunity cost. Those resources that are better suited at making the product will have a lower opportunity cost than those who are less-suited. As more of a product is produced, it becomes increasingly more difficult to find resources that are well-suited to producing that product. Therefore, the opportunity cost of producing more units grows as additional units are produced. and the PPF becomes steeper and steeper. The result is that the PPF is typically bowed-outward due to the law of increasing opportunity costs.
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Suppose the economy was initially in a long-run equilibrium. Then the world economy expands so that foreign incomes rise. U.S. aggregate demand ________ and eventually the money wage rate ________
A) increases; rises B) increases; falls C) decreases; rises D) decreases; falls
Which of the following would not satisfy the potential compensation criterion?
a. The winners from a policy change could compensate the losers so everyone would be better off. b. The policy change was approved by a unanimous vote. c. The policy change was a Pareto superior move d. The policy change moved from a Pareto optimal position to a non-Pareto optimal position.
How will a decrease in price tend to affect supply?
a. Supply will increase. b. Supply will decrease. c. Supply will not change. d. Uncertain.
The destruction of manufacturing jobs and workers leaving their jobs to find better ones both contribute to structural unemployment
a. True b. False Indicate whether the statement is true or false