1. In microeconomics, the fundamental assumptions of scarce resources and unlimi
ID: 1125786 • Letter: 1
Question
1. In microeconomics, the fundamental assumptions of scarce resources and unlimited wants gives rise to the central concern with: a) the model of supply and demand b) perfect competition c) market failures d) efficiency 2. The combination of food and clothing shown by point F on the graph: Hood a) results only because society allocates its resources to goods and services not desired by consumers. b) will occur if some of society's resources are unemployed. c) suggests that the law of increasing relative costs is not relevant in this case. d) is attainable if the economy grows because of an increase in resources and/or development of new technology. 0 Clothing 3. The notion that, under competition, decisions motivated by self-interest promote the social interest is known as a) "big brother" b) the "invisible hand" c) "Keynesian economics" d) the "visible hand" of corporate managers. 4. In a capitalist economy market prices: a) are set by the government. b) equal market quantities. c) help to ration scarce goods and services. d) cause the supply and demand curves to shift.Explanation / Answer
Question 1
In microeconomics, it is assumed that resources at the disposal of economy are scarce while wants are unlimited thus efficient allocation of resources is a matter of concern.
This concern manifests into three central problems of economy - What, How, and For Whom to produce.
It is the model of supply and demand that tends to create solution to these concerns.
Thus, the correct answer is option (a).
Question 2
The combination that lie inside the production possibility curve indicate inefficient utilization of resources and also points to the fact that some resources are either underemployed or are unemployed at all.
So, point F on the graph will occur if some of society's resources are unemployed.
The correct answer is the option (b).
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