The production possibilities curve bows outward from the origin because:
A. resources are not of uniform quality.
B. more production of one good results in more production of the other good.
C. opportunity costs increase as the production of a good increases.
D. opportunity costs decrease as the production of a good increases.
Answer: C
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What do markets with prices, dormitory lotteries, and first-come-first-served rules have in common?
A. They were designed by economic engineers. B. They are nudges. C. They are coordination mechanisms. D. They use price incentives.
If a monopoly earns a loss in the short run and market conditions do not change, then it should exit the industry in the long run.
Answer the following statement true (T) or false (F)
Explain why each of the following is not a valid argument for protection
(a) patriotism (b) fair play (e.g. level international playing fields) (c) preservation of jobs
Molly Sharp is producing a documentary about the plight of the six-toed ferrets of Sri Lanka. Molly has spent $125,000 of her own money on this project and the documentary is now complete. Molly just found out that no studio is willing to release her
documentary and she must now shop it to cable television networks, where she knows she will not be able to recoup her investment. Which of the following statements regarding Molly Sharp's documentary is true? A) She should not try to have her documentary aired on television because she cannot recoup her $125,000 investment. B) Since the $125,000 is a sunk cost, she should still try to have her documentary aired on television even though she will not see a profit. C) The $125,000 is a variable cost, so will not be incurred if she chooses not to have her documentary aired. D) The $125,000 investment is an economic cost, and she will still make an accounting profit even if the television network willing to air her documentary pays her less than $125,000.