Please explain the following:

A production possibilities frontier is a line or curve that:

Multiple Choice

• shows all the possible combinations of outputs that can be produced using all available resources.
• shows what can be produced when all available resources are efficiently used.
• shows the best combinations of outputs that can be produced using all available resources.
• explains why societies make the choices they do.

How have the recent increases in the price of gasoline affected the market for hybrid cars?

Multiple Choice

• The demand has increased, increasing the equilibrium price and quantity of hybrid cars.
• The supply has increased, decreasing the equilibrium price and increasing the equilibrium quantity of hybrid cars.
• The demand has increased, decreasing the equilibrium price and increasing the equilibrium quantity of hybrid cars.
• The demand and supply of hybrid cars have both increased in response to changing gas prices, so the equilibrium quantity has definitely decreased, but the effect on price cannot be determined without more information.

For a firm in a perfectly competitive market, if it is producing at a level of output where marginal costs are less than marginal revenue, it:

Multiple Choice

• should cut back production to increase profits.
• should increase production to increase profits.
• is producing a profit-maximizing quantity.
• should invest more in advertising in order to raise revenues.

Thank you