20

In general, the production possibilities frontier (PPF) is bowed out from the origin because

economic growth is occurring.

the law of increasing costs holds.

the economy cannot produce outside its bounds.

the economy is inefficient.

Question 21

Two countries' Lorenz Curves are shown in Figure 4. Which country has the better (fairer) personal income distribution?

A

B

Undetermined unless the Gini coefficients are provided.

Both countries have the same income distribution.

Question 22

GasandAutomobilesare complements. If gas price drops, then auto's market equilibrium price will be likely to ____ and market equilibrium quantity will be likely to ____.

increase; increase

increase; decrease

decrease; decrease

decrease; increase

Question 24

Coke and Pepsi are substitutes. If the price of Coke increases, then

the demand for Pepsi will decrease.

the demand for Coke will decrease.

the quantity of Coke demanded will decrease.

the supply for Pepsi will increase.