Which of the following is the most accurate statement about production possibilities?
a. An economy can produce only on the production possibilities frontier.
b. An economy can produce at any point inside or outside a production possibilities frontier.
c. An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier.
d. An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier.
Answer: c. An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier.
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When economists say a good is scarce, they mean
a. there are only a limited number of consumers who would be interested in purchasing the good. b. the human desire for the good exceeds the amount freely available from nature. c. most people in poorer countries do not have enough of the good. d. the production of the good has no opportunity cost for society.
An increase in demand for oil along with a simultaneous increase in supply of oil will:
A. Decrease price and increase quantity B. Increase price and decrease quantity C. Increase quantity, but whether it increases price depends on how much each curve shifts D. Increase price, but whether it increases quantity depends on how much each curve shifts
The four criteria that are frequently used in judging the outcome of economic policy are
A. efficiency, equality, stability, and economic growth. B. efficiency, equity, stability, and economic growth. C. efficiency, equality, profitability, and stability. D. efficiency, equity, profitability, and stability.
If quantity supplied is either greater or less than the equilibrium quantity, then all of the following are true except:
a. total loss of surplus will depend on the shape of the demand and supply curves. b. the resulting loss of consumer surplus will depend on the price of the good. c. total loss of surplus will depend on the price of the good. d. there will be an inefficient allocation of resources.