Cal Poly Pomona, EC 201 Principles of Microeconomics – Professor BrownHandout # 1 1) True False - clearly circle either T (true) of F (false)i) T or F A basic principle of economics is that competitive markets allow stronger, smarter, or generally more capable individuals to exploit and thereby hurt weaker, less intelligent, less capable individuals.ii) T or F Principle #1 presented in the textbook “People Face Tradeoffs” states that one tradeoff society faces is between efficiency and equity. This means that (all else constant) making society richer on average causes it to be less “fair” or equitable; and/or making society more equitable causes it to be poorer on average.iii) T or F In a standard production possibilities frontier model (with “bowed out,” or “concave” PPF), as society produces more of a good, the opportunity cost of producing additional units increases. iv) T or F In class, the Production Possibilities Frontier (PPF) model was used to show the tradeoff facing society between production of investment goods (e.g., productive machines) and
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