An efficient allocation of resources exists if
A. one group of people can get more of the things they want without someone else having to give up anything.
B. no one can get more of the things he or she wants without someone else having to give up something.
C. the economy operates at any point under the production possibilities frontier.
D. the economy is operating at any point above the production possibilities frontier.
Answer: B
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Many people have heard that the stock market rises when a team from the National Football Conference (NFC) wins the Super Bowl, and falls when a team from the American Football Conference (AFC) is victorious. If you conclude that there is a causal relationship between the outcome of the Super Bowl and stock prices, you probably are: a. confusing correlation with causation
b. committing the fallacy of composition. c. confusing the direction of causality, since everyone knows that stock prices determine which team wins the Super Bowl. d. none of the above
Based on the simplified trade relations assumed in the textbook, if two countries specialize according to comparative advantage, and trade according to mutually satisfactory terms of trade, then each country's consumption-possibilities frontier will shift inward relative to autarky
Indicate whether the statement is true or false
A production possibilities frontier for two outputs is drawn assuming that:
a. opportunity cost is fixed, but the quantity and quality of resources changes. B. both outputs use the same quantity of each resource, but the technology differs. C. the amount of resources currently available for production is fixed. D. the technology available can only be applied to producing one of the outputs.
The law of increasing costs states that
A. opportunity costs decrease as more of one good is produced. B. increasing resource prices are inevitable because of scarcity. C. opportunity costs increase as more of one good is produced. D. resources can be easily adapted to the production of any good