If the farm adopted a new technology, which allows it to use fewer resources to fatten chickens, explain how the farm's production possibilities will change. Explain how the opportunity cost of producing a bushel of soybean will be affected
What will be an ideal response?
The farm's PPF rotates outward; the maximum quantity of soy-beans (500 bushels) does not change but the maximum quantity of chicken increases. The opportunity cost of a bushel of soybeans increases because more chicken must be given up to produce additional soybeans.
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Refer to above figures. Prior to the shift of the curves, which panel and which curve involve the existence of negative externality?
A) Panel 1 and S1 B) Panel 1 and S2 C) Panel 2 and D1 D) Panel 2 and D2
If all unwelcome or harmful activities were eliminated,
a. the benefits from eliminating these activities would exceed the cost of eliminating them b. there would be no remaining potential Pareto improvements c. society would be more efficient d. society would be less efficient e. the result would be Pareto efficient
The optimal number of units to produce is best expressed when:
a. marginal benefit exceeds marginal cost b. marginal cost exceeds marginal benefit c. marginal benefit and marginal cost are close to equal d. both a and c
In response to a severe recession, the Fed more than doubled the monetary base and pushed short-term interest rates to near zero during 2009-2010 . What happened in 2011?
a. The inflation rate soared to double-digit levels. b. Aggregate demand increased and the economy recovered rapidly. c. The large budget deficit of the earlier years was transformed into a budget surplus. d. The high rate of unemployment continued.