1. A production possibilities frontier can shift outward if
a. resources are shifted from the production of one good to the production of the other good.
b. the economy abandons inefficient production methods in favor of efficient production methods.
c. government increases the amount of money in the economy.
d. there is a technological improvement.
2. Microeconomics is the study of
a. how government affects the economy.
b. how money affects the economy.
c. how individual households and firms make decisions.
d. how the economy as a whole works.
3. In the circular-flow diagram, which of the following is not a factor of production?
4. The term used to describe a situation in which markets do not allocate resources efficiently is
a. economic meltdown.
b. the effect of the invisible hand.
c. market failure.
5. A rational decision maker takes an action only if the
a. average benefit is greater than the average cost.
b. marginal benefit is less than the marginal cost.
c. marginal benefit is greater than both the average cost and the marginal cost.
d. marginal benefit is greater than the marginal cost.
Production Possibility Frontier:
Production possibility frontier is a graphical representation of production possibilities of an economy or a firm with given resources. The curve, typically, considers two goods that can be produced with given resources.
Answer and Explanation: 1
- 1. A production possibilities frontier can shift outward if d. there is a technological improvement.
A production possibility frontier shows the...
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fromChapter 57 / Lesson 5
In economics, production possibilities allow us to visualize opportunity costs. Learn about the definition of opportunity costs of production, explore graphing costs through a model called a production possibilities chart, and consider what might happen upon moving the curve.