Why is a point below the production possibilities curve less efficient than a point on that curve?
What will be an ideal response?
A point on the production possibilities curve is efficient because it means the economy is producing the maximum outputs of goods and services with given resources and technology. By contrast, a point below the production possibility curve means that the use of the given resources is not generating the maximum possible outputs of goods and services. Thus, this point represents an inefficient combination of outputs produced with available resources and technology.
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Why are firms in oligopoly interdependent?
What will be an ideal response?
If a market economy has a self-correcting mechanism, when output is lower than potential or full-employment output,
a. changes will occur that will automatically guide the economy back to full employment. b. resource prices will increase. c. prolonged unemployment such as was experienced during the Great Depression will occur. d. the economy will fall into a more severe recession.
Store clerks are known to have low wages. This is likely to reflect the fact that
a. store clerk jobs are perceived to be relatively easy, thus attracting low-skill workers. b. store clerk jobs are perceived to be relatively difficult, thus attracting high-skill workers. c. many people perceive the job of store clerk as having significant risk of death on the job. d. store clerks are required to have a college degree.
Which of the following are characteristics of a typical isoquant?
A. All input combinations on the isoquant will produce the same level of output. B. The marginal rate of technical substitution decreases as more labor is substituted for less capital. C. A change in input prices shifts the isoquant map. D. both a and b E. none of the above