Exhibit 2-15 Production possibilities curve
In Exhibit 2-15, the shape of the production possibilities curve demonstrates:
A. changing prices.
B. economic growth.
C. decreases in resources.
D. the law of increasing opportunity costs.
Answer: D
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Who gains from a law requiring people who want to enter the taxicab business to prove they are thoroughly competent, honest, and reliable before they can obtain a license?
A) Local people who use taxicabs frequently and regularly B) Local people who use taxicabs only occasionally C) Out-of-town visitors who use taxicabs D) Owners of taxicab licenses E) Potential owners and operators of taxicabs who are members of minority races
The market wage rate for a car mechanic is $30 per week. Peter, who owns a garage, is in urgent need of a mechanic to head his existing employees. He is willing to hire Alex and pay $8 extra in order to make sure that Alex puts in his best efforts. If Alex accepts the job, which of the following statements will be true?
a. There is no disutility of hard work for Alex as his pay exceeds the market wage rate. b. Alex has no incentive to put in his best efforts on this job. c. Alex's disutility of extra effort in this new job is less than the utility from extra pay. d. Peter's benefit from hiring Alex will be limited as he is paying above the market wage rate.
If you were a borrower, which of the following unexpected changes in inflation would you prefer once you have taken out a long term fixed rate loan?
a. An increase from 2% inflation to 6% inflation. b. An increase from 7% inflation to 10% inflation. c. A decrease from 14% inflation to 8% inflation. d. A decrease from 6% inflation to 3%.
The share of GDP going to federal taxes
a. has been about 16 to 20 percent for the past 40 years. b. has been about 35 percent for the past 40 years. c. was about 40 percent until the early 1980s and has dropped greatly since then. d. has risen steadily in the past 40 years to about 35 percent.