Using Figure 1.4 above, we know the production of 9 units of soda and 3 units of pizza is 
A. possible, but there would be unemployment.
B. impossible because we either do not have the resources or the technology.
C. undesirable.
D. possible, but only if all resources were fully employed.
Answer: B
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If people stand to produce at lower cost when specializing and producing in larger quantities
a. they cannot gain from trade because each one is just as potentially productive as another. b. they cannot gain from trade because most people's wants can be easily satisfied with what they can produce themselves. c. they cannot gain from trade if they have similar tastes. d. they can gain from trade by specializing and increasing productivity.
For Adam Smith, commercial society is characterized by
A) private property rights. B) specialization in production. C) voluntary exchange. D) all of the above.
Which of the following purported externalities in fact does not distort the allocation of resources? I. An individual's unwillingness to cut his or her own lawn in an otherwise immaculately kept neighborhood. II. Smoke produced by a new firm in an area which raises the costs of other firms. III. A new firm's bidding up skilled wages in an area, thereby raising costs of other firms. IV. An
individual's unwillingness to obtain job training, thereby lowering the total GNP. Possible choices: a. I, III, and IV. b. III and IV. c. III only. d. IV only.
If both the marginal cost and the average variable cost curves are U-shaped. At the minimum point on the average variable cost curve, the marginal cost must be:
a. greater than the average variable cost. b. less than the average variable cost. c. equal to the average variable cost. d. at its minimum.