Draw a production possibilities frontier for an economy, with the axes labeled "military goods" and "peace goods." Indicate the region that is attainable and the region that is not. Explain the shape of the curve-what assumptions did you make in drawing it?
The curve should look like the figures in the text. The portion below and to the left of the curve is attainable, the area above and to the right of the curve is not attainable. The shape should be bowed out from the origin, based on the principle of increasing cost. This is based upon the assumption that resources used in the production process are better suited in one application than in another.
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If there is a change in the ability of a firm to produce a given level of output with a given level of inputs, we say there is
A) an increase in labor productivity. B) a movement along a given per-worker production function. C) technological change. D) human capital investment.
Private-sector firms’ beliefs about the economic climate can cause unemployment to linger even after a recession is over
Select whether the statement is true or false. A. True B. False
There is an externality present only when
A) private costs equal social benefits. B) private benefits equal social benefits. C) private costs or benefits diverge from social costs or benefits. D) private costs equal social costs.
The reason why people are charged for an additional can of soda they get from a soda machine, but are not charged for an additional paper taken from a newspaper dispensing machine, is that the marginal utility of an additional:
A. Soda is close to zero, but the marginal utility of an additional paper diminishes slowly B. Soda diminishes slowly, but the marginal utility of an additional paper is close to zero C. Soda increases by more than that of the newspaper as consumption increases D. Newspaper increases by more than that of soda as consumption increases