Explain the connection between opportunity cost and the PPF
What will be an ideal response?
When moving along the production possibilities frontier, more of one good or service can be obtained only by giving up another good or service. The good or service given up is the opportunity cost of the good or service obtained.
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If the marginal social benefit of a city's sewage system is less than the marginal social cost, then the city will achieve an efficient use of resources if it ________
A) decreases the capacity of the sewage system B) does not change the capacity of the sewage system C) increases the capacity of the sewage system D) increases the sewerage charge that the residents pay
Which of the following was the main reason for increased counterparty risk in the shadow banking system prior to the financial crisis of 2007-2009?
A) increased leverage B) government insuring money market deposits C) many firms borrowing long term for short-term investments D) trading of derivatives on exchanges
Economic theory
a. is a deliberate simplification of factual relationships. b. seeks to disprove a hypothesis. c. is based mainly on assumptions. d. seeks to prove political ideals.
In the long run, which of the following will occur if the U.S. federal government eliminates restrictions on migration of Mexican workers to the United States?
a. The United States' total K/L ratio will rise. b. Mexico's total K/L ratio will fall. c. Wages of American workers who compete with Mexican workers for jobs will rise. d. The returns to U.S. owners of capital will remain unchanged.