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12. Why is a production possibilities lrontier typically drawn as a curve, rather than a straight line? 13. Explain why societies cannot make a choice above their production possibilities frontier and should not make a choice below it. 14. What are diminishing marginal returns? 15. \"Rial efficiency? is productive efficiency? Allocative CRITICAL THINKING QUESTIONS 19. Suppose Alphonso's town raises the price of bus tidvtets from $0.50 to $1 and the price of burgers rises from $2 to $4. Why is the opportunity cost of bus tickets unchanged? Suppose Alphonso's weekly spending money increasE from $10 to 520. How is his budget consuaint affected from all three changes? Explain. 20. During the Second World war, Germany's factories were decimated. It also suffered many human casualties, both soldiers and civilians. How did the war affect Germany's production possibilities curve? PROBLEMS Use this information to answer the following 4 questions: Marie has a weekly budget of $24, which she likes to spend on magazines and pics. 24. [f the price of a magazine is $4 each, what is the maximum number of magazines she could buy in a week? 25. If the price of a pie is $12. what is the maximum number of pies she could buy in a week? Chapter 2 |Choioe in 21de of Scarcity 15. 'What is the difference between a positive and a normative statement? 1?. Is the econorruc model of decision-making intended as a literal description of how individuals, firms, and the governments actually make decisions? 13. What are four responses to the claim that people should not behave in the way described in this chapter? 21. It is clear that productive inefficiency is a waste since resources are used in a way that produces less goods and services than a nation is capable of. Why is allocative inefficiency also wasteful? 22. What assumptions about the economy must be true for the invisible hand to work? To what extent are those assumptions valid in the real world? 23. Do economists have any particular expertise at making nomlative arguments? In other words, they have expertise at making positive statements (i_e., what will happen] about some econorruc policy, for example, but do they have special expertise to judge whether or not the policy should be undertaken? 25. Draw Marie's budget constraint with pies on the horizontal axis and magazines on the vertical axis. What is the slope of the budget consoaint? 2?. What is Marie's opportunity cost of purchasing a pie? Principles of Microeconomics 2e SENIOR CONTRIBUTING AUTHORS STEVEN A. GREENLAW, UNIVERSITY OF MARY WASHINGTON DAVID SHAPIRO, PENNSYLVANIA STATE UNIVERSITY Based on the 2nd edition of Principles of Economics, Economics and the Economy, 2e by Timothy Taylor, published in 2011. openstax