In the above figure, the combination of computers and televisions shown by point x
A. is not attainable at the point in time for which the graph is drawn.
B. can be attained only if some of society's resources are unemployed.
C. results only because society allocates its resources inefficiently.
D. suggests that the law of increasing relative costs does not hold.
Answer: A
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Determining “what ought to be” in the economy is considered
a. positive economics. b. normative economics. c. distributive economics. d. mesoeconomics.
An effluent fee is imposed on a steel firm to reduce the amount of waste materials that it dumps in a river. Use the following two statements to answer this question:
I. The more easily factors of production can be substituted for one another (for example, capital can be used to reduce waste water), the more effective the fee will be in reducing effluent. II. The greater the degree of substitution of capital for waste water, the less the firm will have to pay in effluent fees. A) Both I and II are true. B) I is true, and II is false. C) I is false, and II is true. D) Both I and II are false.
From the Hotelling rule, we would expect that a perfectly competitive industry selling an exhaustible resource would
A) sell more of it than a monopolist would in each period. B) sell it all at once. C) sell less of it than a monopolist would in each period. D) not sell it. E) not sell it unless interest rates were low.
"The United States should adopt more open trade policies because they historically have caused increased economic growth." This is an example of what kind of statement?
A. Unequivocally true B. Normative C. Positive D. Unequivocally false