QUESTION 3

1. The amount of one good or service that must be forgone to obtain an additional unit of another good is known as the
2. A.marginal benefit.
3. B.marginal opportunity cost.
4. C.comparative advantage.
5. D.marginal expansion condition.
6. E.tradeoff quotient.

QUESTION 4

1. On a given production possibilities frontier, which of the following isnotassumed to be fixed?
2. A.the amount of labor available
3. B.the amount of capital available
4. C.the level of technology
5. D.the amount of land and natural resources available
6. E.production of each item

QUESTION 5

1. If a nation is producing at a point below its PPC, then
2. A.it is operating at less than maximum efficiency.
3. B.it may not have enough resources.
4. C.it may not have enough technological know-how to produce on the PPC.
5. D.it cannot increase the production of one product without sacrificing another product.
6. E.it is not realizing its opportunity costs.

QUESTION 6

1. A production possibilities frontier will shift outward if there is an improvement in technology.
2. A.True
3. B.False

QUESTION 7

1. Opportunity cost
2. A.applies only to consumption decisions.
3. B.applies only to production decisions.
4. C.is the same as monetary cost.
5. D.exists because of scarcity.
6. E.is irrelevant for wealthy economies.

QUESTION 8

1. Given a production possibilities curve for defense goods and nondefense goods, which of the following isnottrue? A production point outside the curve
2. A.may be attained if new resources are discovered.
3. B.may be attained by acquiring a new technology.
4. C.may be attained by shifting resources to defense goods.
5. D.may be attained by acquiring both a new technology and greater resources.
6. E.cannot be attained with the current level of resources and technology.

QUESTION 9

1. Given a production possibilities curve for defense goods and nondefense goods, if a nation is producing at a point inside the PPC, then it is possible to increase production of defense goods without sacrificing production of nondefense goods.
2. A.True
3. B.False

QUESTION 10

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