Which of the following most accurately summarizes the implications of an economy's production possibilities curve?
A. If all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
B. If all the resources of an economy are being used efficiently, it is generally possible to produce more of one good without having to sacrifice the production of other goods.
C. Over time, it is generally impossible for a country to expand its production of goods.
D. An economy will automatically move toward a point that lies outside of the production possibilities constraint unless proper government policy constrains production.
Answer: A
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The Great Depression of the 1930s, with a large number of workers and factories unemployed, would be represented in a production possibilities frontier graph by
A) a point outside the frontier. B) an intercept on either the vertical or the horizontal axis. C) a point inside the frontier. D) a point on the frontier.
Joe walks into Best Buy prepared to spend no more than $500 cash on a new computer, but the price turns out to be $600. Joe is told if he finances it on a Best Buy credit card, it will cost $600, but he will get a $25 gift card free with the computer. Joe opts to open the credit card and puts the full $600 on the account. According to economic theory, Joe's decision is:
A. irrational. B. rational. C. budget-conscious. D. optimal.
A local restaurant offers an "all you can eat" Sunday brunch for $12 . Susan eats four servings, but leaves half of a fifth helping uneaten. Why?
a. Her marginal value of a serving of brunch has fallen below $12. b. Her marginal value of a serving has fallen below $2.36 ($12 divided by 5 servings). c. Her marginal value of food has fallen to zero. d. The total value she places on brunch today exactly equals $12.
Given: 80 million employed; 20 million unemployed; 10 million collecting unemployment insurance benefits; 10 million discouraged workers. Find: (1) the number of people in the labor force; (2) the unemployment rate.
What will be an ideal response?