How does the production possibilities frontier illustrate opportunity cost?
What will be an ideal response?
The negative slope of the production possibility curve illustrates the concept of opportunity cost. Moving along the production possibility frontier, producing additional units of a good requires that the output of another good must fall. This sacrifice is the opportunity cost of producing more of the first good.
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In the United States, the strategy of monetary policy
a. has not changed even as the economic environment has varied. b. has been to target interest rates. c. has been to target the money supply. d. None of the above
Refer to Table 16.1. Which of the following statements is correct?
A) There are potential gains from trade if: (1 ) Mexico specializes in the production of tomatoes, (2 ) Guatemala specializes in the production of beer, and (3 ) Mexico trades tomatoes to Guatemala for beer. B) There are potential gains from trade if: (1 ) Mexico specializes in the production of beer, (2 ) Guatemala specializes in the production of tomatoes, and (3 ) Mexico trades beer to Guatemala for tomatoes. C) There are no potential gains from trade because Mexico has an absolute advantage in the production of beer and tomatoes. D) There are no potential gains from trade because Guatemala has an absolute advantage in the production of beer and tomatoes.
An example of a nontradable good is:
A. insurance services. B. fresh pizza. C. a double-decker bus tour of London. D. All of these would be considered a nontradable good.
The key demand-side factors that cause the depletion of finite natural resources are:
A. Population and productivity B. Productivity and per capita consumption C. Per capita consumption and efficiency D. Population and per capita consumption