What does a production possibilities curve show?
What will be an ideal response?
A production possibilities curve shows the combinations of maximum outputs that can be produced with a fixed amount of resources that are fully employed, and fixed technology.
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What happens when a firm encounters diminishing returns? What causes diminishing returns?
What will be an ideal response?
The "lemons problem" in the used car market arises from
A) the difficulty U.S. producers have in making reliable cars. B) the difficulty buyers have in distinguishing good cars from lemons. C) the tendency of buyers of used cars to pay for them with bad checks. D) the reluctance of many car dealers to handle used cars.
Pizza and beer are complements. The price of beer increases. What happens to the market for pizza?
A. Equilibrium price falls; equilibrium quantity rises. B. Equilibrium price falls; equilibrium quantity falls. C. Equilibrium price rises; equilibrium quantity falls. D. Equilibrium price rises; equilibrium quantity rises.
Labor economists sometimes refer to labor demand as "derived" demand. In this context, where does "derived" come from?
A. consumer demand for the firm's product B. the degree of competition in the firm's industry C. the firm's profit D. the firm's production function E. the union's willingness to accept a lower wage