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1. Given a production possibilities curve, a point __________.
a. inside the curve represents unemployment
b. on the curve represents full employment
c. outside the curve is currently unattainable
d. all of the above

2. Compare two economies A and B that start out with identical production possibilities curves. Economy A chooses an efficient point with 6 consumption goods and 3 capital goods, while economy B also chooses an efficient point, but with 4 consumption goods and 5 capital goods. In the future we can predict __________.
a. economy A will operate inefficiently
b. economy B will operate inefficiently
c. economy A will grow faster than economy B
d. economy B will grow faster than economy A

2007-04-04 18:03:15 · 4 answers · asked by mohotbabe 2 in Social Science Economics

4 answers

1 d. all of the above

2 d. economy B will grow faster than economy A

It says both economies a currently efficient. Producing more capital goods is like saying they are building factories instead of candy.

2007-04-04 19:21:54 · answer #1 · answered by JuanB 7 · 0 0

A production possibility curve is described in economics as a curve showing all the possible combinations of two goods that a country can produce within a specific period, and with all its resources fully and efficiently employed.

#1, answer D. all of the above
Note: A is true, bcoz unemployment means resources are not being used- inefficiency is the curve shifting left( inside the original curve).
B is correct bcoz full employment means efficiency, and that is the curve itself. C is correct bcoz the curve is not ready to shift right bcoz it is beyond its resources at the moment.

#2. Answer D, bcoz an economic system involves producers (firms) and consumers (households). Both function in a relationship of supply and demand. Firms cannot provide adequate consumption goods, unless they can use factors of production (eg;capital) to produce these goods. Country B is obviously producing capital goods and consumers goods almost in a ratio of 1:1. (4:5). Country B clearly has the best combination of goods (bcoz it sacrifices less from each good to produce both, lower opportunity cost). Whereas A is more inefficient, it sacrifices a lot of capital goods to produce consumption goods, by its production ratio 6:3.

Conclusion: A country who produces at lower opportunity cost, is more efficient and will grow faster. Production possibility curve demonstrates the economic issues of choice and opportunity cost.

2007-04-05 02:54:33 · answer #2 · answered by She-whom-shall-not-be-named 4 · 0 0

#1 = D, its only possibilities ant the economists itself considers the ups and down of the entire situation.

#2 = A, The more you consumed the more you advance... chain of life, if you run out of supply and demads still increasing people will find a way and alternative to obtain it. which of the two will grow faster with the same program? in the end all of us will definitely loss, beacuse of too much consumption... human instinct... never been contented in a sigle thing... crave for more...

2007-04-05 01:19:27 · answer #3 · answered by Roberto M 1 · 0 0

Both are D

2007-04-05 13:04:40 · answer #4 · answered by dunny456 2 · 1 0

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