A production possibilities curve shows:
A. that resources are unlimited.
B. that people prefer one of the goods more than the other.
C. the maximum amounts of two goods that can be produced, assuming the full use of
available resources.
D. combinations of capital and labor necessary to produce specific levels of output.
Answer: C
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If the price of a good rises and the consumer's budget remains the same, what happens to the consumer's consumption possibilities?
What will be an ideal response?
If the price of film increases, the demand for film processing would decrease; moreover, the equilibrium price and quantity of film processing should also decrease
a. True b. False
Government spending on interstate highways, public housing facilities, and defense projects are all ways that the president can
a. close a recessionary gap b. close an inflationary gap c. combat inflation d. shift the aggregate demand curve to the left e. reverse the paradox of thrift
If a local shop buys a used motorcycle for $1,000, makes repairs and refurbishes it, then resells it for $2,500, the
a. shop contributes value added equal to $1,500, but nothing is added to GDP. b. shop contributes value added equal to $1,500, and consequently $1,500 is added to GDP. c. shop contributes nothing to production because only existing goods are involved. d. shop contributes value added equal to $2,500, but only $1,500 is added to GDP.