Micro-Economics Ch 1-2 Questions

Micro-Economics Ch 1-2 Questions - Name: _ Date: _ 1. The...

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Page 1 Name: __________________________ Date: _____________ 1. The importance of an economic model is that it allows us to: A) build a complex and accurate model of the economy. B) build an accurate mathematical model of the economy. C) focus on the effects of only one change at a time. D) avoid opportunity costs. 2. The production possibility frontier illustrates that: A) the economy will automatically end up at full employment. B) an economy's productive capacity increases proportionally with its population. C) if all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced. D) economic production possibilities have no limit. 3. If the production possibility frontier were a straight line sloping down from left to right, this would suggest that: A) more of both goods could be produced moving along the frontier. B) the two products must have the same price. C) the opportunity costs of the products are constant. D) there are no opportunity costs. 4. When moving along a production possibility frontier, the opportunity cost to society of getting more of one good: A) is constant. B) is measured in dollar terms. C) is measured by the amount of the other good that must be given up. D) usually decreases. 5. If an economy has to sacrifice increasing amounts of good X for each unit of good Y produced, then its production possibility frontier is: A) bowed out from the origin. B) bowed in toward the origin. C) a straight line. D) a vertical line. 6. The fact that a society's production possibility frontier is bowed out or concave to the origin of a graph demonstrates the law of: A) increasing opportunity cost. B) decreasing opportunity cost. C) constant opportunity cost.
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Micro-Economics Ch 1-2 Questions - Name: _ Date: _ 1. The...

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