A point inside a society's production possibilities curve represents
A) an unattainable combination of outputs.
B) an output combination that satisfies the needs of the population.
C) an underutilization of productive resources.
D) a technically superior output combination.
Answer: C
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In the real world, it is likely that wage negotiations:
A. drag on for years to see which side is more patient. B. often end with the company enjoying a larger payoff, since they can afford to be more patient. C. often end with the worker's enjoying a larger payoff, since they are not losing as much in profit as the company. D. do not drag on for years.
In a planned economy,
a. prices are used to coordinate economic activity. b. central planners set production targets and tell producers how to produce. c. high prices discourage use of the most scarce resources. d. central planners allow the price to determine distribution of a product.
In 1980, in order to stimulate agricultural production, Fidel Castro allowed Cuban farmers to sell their goods directly to consumers and keep whatever profit they made. Some farmers were earning $50,000 per year, compared with the average worker income of $2,400. The workers resented this. Castro denounced the farmers as “capitalist gangsters” and closed the free markets. Cuban cash income declined 5 percent and fresh vegetables were in short supply. This illustrates the economic concept of the
A. law of comparative advantage. B. equality-efficiency trade-off. C. cost disease of the service sector. D. unemployment-inflation trade-off. E. All of these responses are correct.
According to the Keynesian model,
A. wages are flexible because workers wouldn't otherwise be able to keep their jobs. B. the price level is somewhat fixed due to social forces, which keeps an economy from remaining at an equilibrium level of unemployment. C. the government puts price controls on the economy, keeping the price level fixed. D. prices are subject to significant fluctuations as demand and supply change.