80 60 - 50 40 30 20 10 0 10 20 30 40 50 60 70 0 Butter (thousands of units) 20.

Question

80 60 - 50 40 30 20 10 0 10 20 30 40 50 60 70 0 Butter (thousands of units) 20. The opportunity cost of moving from point B to A in the diagram above is a. 10,000 units of butter b 20,000 units of butter C50,000 units of guns d. The maximum amount of butter that can be produced with available resources 21. A movement from point D to B in the diagram above is a. A movement from an efficient point to an inefficient point b. Impossible, since the economy could never have been at point D in the first place c. A movement from an inefficient point to another efficient point d. A movement from an inefficient point to another inefficient point 22. If the price of a good rises above the equilibrium price, there will be a Surplus and inventories will rise a. b. Surplus and inventories will fall Shortage and inventories will rise Shortage and inventories will fal c. d. 23. The law of demand states that price of a good rises, more units are demanded a. As the b. There is a c. There is a negative relationship between the direct relationship between the price of the good and the quantity produced price ofa good and the quantity of the good demanded There is an increase in the need for a d. 24. In the free marketplace good as the price of the good increases a. Surpluse b. s and shortages can both persist and never be eliminated can last for a long time, but shortages disappear relatively quickly can last for a long time, but surpluses disappear relatively quickly Surpluses Neither surpluses nor shortages can 25. If supply increases and demand decreases, then d. persist the Price will definitely fall a. b. Price will definitely rise c. Quantity will definitely fal d. Quantity will definitely rise

Explanation / Answer

20> b

Reason

Opp cost is the loss of other alternatives when one alternative is chosen.

21> b

Any point above the PPF can not be attained.

22> a

Supply will be higher than the demand and thus there will be a surplus.

23> c

The law of demand is a microeconomic law that states, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease, and vice versa.

24> d

Market moves to equilibrium on itself

25> d

If both increases, quantity can not fall.

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