Chapter 2 Micro - Practice Questions.doc - Chapter 2 Micro...

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Chapter 2 Micro – Practice Questions1.Whether they are straight lines or bowed outwards, production possibilities curves arealways sloped downward.Why is this the case?a.This is the result of scarcity.If resources are being used efficiently, then we can onlyproduce more of one thing by producing less of another.b.Regardless of its shape, a downward sloping production possibilities curves alwaysreflects the idea of constant opportunity cost.c.Regardless of its shape, a downward sloping production possibilities curves alwaysreflects the idea of increasing opportunity cost.d.This is nonsense, production possibilities curves can and do slope upwards.
2.Which of the following indicates that an economy is not currently operating efficiently?
3.Marshall is an attorney and also an excellent typist. He can type 120 words perminute, but he has all of the attorney work he can handle where he charges $180per hour. Marshall’s friend Ted is an architect who would like some typing work,but can only type 40 words per minute. According to the law of comparativeadvantage, Marshall should hire Ted to do his typing if and only if Ted’s wage rateis less than
4.Which of the following is most likely to stop a voluntary exchange from occurring?

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Term
Fall
Professor
N/A
Tags
Economics, Transaction cost, TED, Jeff Bezos

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