How is a production possibilities curve similar to a budget constraint?
What will be an ideal response?
A production possibilities curve shows the various combinations of goods or services that are possible to produce with a given amount of resources. Budget constraints show the different combinations of goods or services that are possible to consume with a given amount of income. Both the budget constraint and the production possibilities curve represent constraints that economic agents use in making optimizing decisions.
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Suppose a buyer and a seller agree to split the cost of hiring an interpreter who charges $4 per transaction. The seller's opportunity cost is $35, while the buyer values the good at $45 . If the gains from this transaction are split equally between the buyer and the seller, how much will each gain from this transaction?
a. $10 b. $4 c. $3 d. $5
When the price of a commodity rises, we can expect
a. marginal utility of the last unit purchased will rise. b. marginal utility of the last unit purchased will fall. c. marginal utility of the last unit purchased will be unaffected. d. purchases to rise because of the increased marginal utility.
After taking out a one year loan with an annual interest rate of 5 percent, Tommy pays $2,100 back to the bank. The principal of the loan must be ________ and the interest payment must be ________.
A. $2,100; $100 B. $100; $2,000 C. $2,000; $100 D. $100; $2,100
When economic growth in a large country lowers its willingness to trade, it can result in
A. an improvement in the country's terms of trade. B. the Dutch Disease. C. immiserizing growth. D. a biased growth.