Explain why individuals make choices that are directly on the budget constraint, rather than inside the budget constraint or outside it.
What will be an ideal response?
Answer: Individuals will make choices based directly off of the budget constraint so that they're getting the most use out of their income.
(maximizing money>>maximizing utility
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A manufacturer of towels finds that his returns to scale are constant. Which of the following conclusions can be drawn?
a. The long-run total cost curve is horizontal. b. The long-run average cost curve is horizontal. c. The long-run total cost curve is downward sloping. d. The long-run average cost curve is downward sloping.
The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and
a. society's preferences. b. the available production technology. c. a fair distribution of the output. d. the available demand for the output.
Which of the following factors has led to poor plan performance?
(a) unanticipated changes, such as in terms of trade. (b) corruption of government officials. (c) foreign firms are less subject to the constraints of the plan than domestic ones. (d) all of the above. (e) none of the above.
In 1990, which two countries saw inflation rates over 2,000%?
a. Brazil and Argentina b. Cuba and China c. the United States and Great Britain d. Argentina and Chile