A baker can produce two products: cupcakes and pies. The table below is the baker's production possibilities schedule:Production Possibilities ScheduleProductABCDEFCupcakes01220365681Pies1086420If the baker uses all of its resources to produce only cupcakes, then its production combination will be
A. F.
B. A.
C. B.
D. E.
Answer: A
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An economic model can be defined as
A. a testable claim that can be evaluated with proper data. B. a representation of a theory or a part of a theory. C. another word for theory. D. a method to distinguish correlation from causation. E. All of these responses are correct.
Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather more mangoes per hour than Maryann and can also catch more fish per hour than can Maryann. Therefore:
A. Maryann should specialize in the activity for which she has a comparative advantage. B. Ginger should specialize in the activity for which she has an absolute advantage. C. there are no gains to specialization and trade for Maryann. D. there are no gains to specialization and trade for Ginger.
A Nash equilibrium occurs if all players in a game play their best strategies
A. before their competitors do. B. without knowing what their competitors do. C. given what their competitors do. D. only if their competitors are unaware of their strategies.
If market price is equal to equilibrium price
A. there is a surplus. B. there is a shortage. C. there is neither a surplus nor a shortage.