When constructing a production possibilities frontier, which of the following assumptions is not made?
a. The economy produces only two goods or two types of goods.
b. Firms produce goods using factors of production.
c. The technology available to firms is given.
d. The quantities of the factors of production that are available are increasing over the relevant time period.
d
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Suppose the government imposes a $1 tax on frisbees, and the price of a frisbee paid by demanders rises by $1
A) The price rise is consistent with a perfectly elastic supply for frisbees. B) The price rise is consistent with a perfectly elastic demand for frisbees. C) The price rise is consistent with a downward-sloping supply curve for frisbees. D) The price could never rise this much, so this situation cannot happen.
You are the owner of an art supply store, selling both paint and paintbrushes. In order to maximize total sales you should
a. Decrease the price on the paint only b. Decrease the price on paintbrushes only c. Decrease the price on both the paint and the paintbrushes d. Increase the price on both the paint and the paintbrushes
Which of the following examples would most likely result in an economic loss for a firm?
a. A new firm competes with an appliance producer. b. A mattress producer increases its P* over MC. c. A drug company increases its budget for advertising. d. The government places regulations on a soft drink producer.
If air pollution control is a public good, it follows that:
A. additional persons can benefit from a given amount of air pollution control without reducing the benefits enjoyed by others. B. the efficient output of air pollution control is zero. C. the more air pollution control enjoyed by any one person, the less is available to others. D. the efficient output of air pollution control can be attained by selling it by the unit in a market.