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Refer to the above diagram when answering the following questions. 7. Which statement about the PPC is TRUE? A. The curve reflects increasing opportunity costs. B. The opportunity cost of producing more guns, in particular moving from Point B to Point C, is 1.5 units of butter. C. To reach a point outside the curve, such as G, there must a be change in technology, the time period involved, or the number and quality economic resources. D. All of the above. 8. Which ofthe following is NOT represented by the PPC model? A. trade-offs B. scarcity C. price levels D. 'I' opportunity cost 9. If the economy is at full employment and full production, and the production of butter increases from 6 units to 9.5 units, the opportunity cost would be: A. 0 units of guns. B. 3.5 units of butter C. 5 units of guns. D. 3 units of guns. 10. TRUE or FALSE For this economy to produce at Point 6 (8.5 butter, 3.5 guns) then the use of economic resources needs to change, or technology needs to improve. 11. Consider this PPC for guns and butter. Which of the following is most likely to shift the PPC inward? A. a change in tastes and preferences. B. the production of more guns and less butter. C. moving resources from the production of guns to the production of more butter. D. a decrease in the skill level of the labour force 13. The best point for this economy is: A. Point C B. It doesn't matter, as long as it's some of each. C. Point A because military goods are more valuable than consumer goods. D. Unknown, because more information is needed to make a marginal decision (marginal benefit versus marginal cost). 14. The underlying reason production possibilities curves are likely to be bowed out from the origin is: A. because markets are efficient. B. to make it easier to illustrate a change in technology that moves the curve outward. C. some resources, including labour, are better used producing one good rather than another. D. there is always some level of unemployment, usually frictional unemployment. 15. The construction of demand and supply curves assumes that the primary variable influencing decisions to produce and purchase goods is (are): A. price. B. expectations. C. preferences. D. income. 16. A local grocery store orders 200 cases of water each week and sells them at a price of $6.00 per case. At the end of the first week, they have only sold 160 cases. What economic situation is the grocery store facing and what will have to happen to price in order for equilibrium to be attained? A. surplus; price will rise. B. surplus; price will fall. C. shortage; price will rise. D. shortage; price will fall. 17. Micro economics approaches the study of economics from the viewpoint of , while macro economics focuses on . A. the whole economy, the individual players in the economy. B. individual players in the economy, the whole economy. C. the whole economy, the whole economy. D. none of the above 18. The example Adam Smith uses in his book, The Wealth of Nations to explain specialization and division of labour is: A. the automobile industry alongside Henry Ford and the introduction of the assembly line. B. the invention of Al or artificial intelligence which allows productivity to increase. C. the textile mills and the making of shoes. D. the manufacture of pins. 19. TRUE or FAISE If two variables are positively or directly related, then as the value of one variable increases, the value of the other increases