The diagram below shows the production possibilities frontier (PPF) for a country that produces guns (G) and butter (B). Most people in the country prefer guns, so in the absence of international trade, point A represents the combination of G and B that maximizes welfare. The slope of the PPF at point A is equal to -2. 
What is the opportunity cost of 1 unit of guns before trade? What is the opportunity cost of 1 unit of butter?
What will be an ideal response?
1 Ton of G = 2 tons of B
1 Ton of B = ½ tons of G
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In the above figure, if the price is $4 per unit, how many units will a profit maximizing perfectly competitive firm produce?
A) 0 B) 5 C) 20 D) 30
Workers expect inflation to rise from 3% to 5% next year. As a result, this should
A) shift the short-run aggregate supply curve to the left. B) move the economy down along a stationary short-run aggregate supply curve. C) shift the short-run aggregate supply curve to the right. D) move the economy up along a stationary short-run aggregate supply curve.
A firm's "normal profit" is best characterized by the
A) average of a firm's profits over the past five years. B) amount of profit necessary to keep the price of a firm's stock from changing. C) amount of profit a firm could earn in its next best alternative activity. D) the average amount of profit earned in the firm's industry.
Inventory reductions are a signal indicating that
a. the economy is close to disaster. b. the Dow Jones Industrial Average will fall. c. manufacturers need to increase production. d. All of the above are true.