80 20 50 40 30 20 10 0 10 20 30 40 50 60 70 Butter (thousands of nis) 20. The op
ID: 1126330 • Letter: 8
Question
80 20 50 40 30 20 10 0 10 20 30 40 50 60 70 Butter (thousands of nis) 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 c 50,000 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 equilbrium price, there will be a Surplus and inventories will rise a. b. Surplus and inventories will fall Shortage and inventories will rise d. c. Shortage and inventories will fall 23. The law of demand states that a. As the price of a good rises, more units are demanded b. There is a direct relationship between the price of the good and the quantity produced c. There is a negative relationship between the price of a good and the quantity of the good d. There is an increase in the need for a good as the price of the good increases 24. In the free marketplace Surpluses and shortages can both persist and never be eliminated b. Surpluses can last for a long time, but shortages disappear relatively quickly c. Shortages can last for a long time, but surpluses disappear relatively quickly d. Neither surpluses nor shortages can persist supply increases and demand decreases, then the a. Price will defihitely fall b. Price will definitely rise c Quantity will definitely fall d Quantity will definitely rise 25. rumExplanation / Answer
20
Opportunity cost can be defined as the production of output which is given up for producing some additional units of another output.
As it can be seen in the diagram by moving from point B to A, the economy for getting 20,000 more guns, the economy forgoes 20,000 units of butter. It means the opportunity cost is 20,000 unit of butter.
Hence option b is the correct answer,
21.
Since the point D is not possible to achieve it is out of the PPF. Hence it can be said that it is impossible, since the economy could never have been at point D in the first place.
Hence option b is the correct answer.
22.
Since with the increase in the equilibrium price, the supply increases because it is profitable to produce more and demand decreases because it is expensive to purchase. Hence there will surplus and inventories will rise.
Therefore option a is the correct answer.
23.
According to the law of demand, there exists an inverse relationship between price and quantity demanded and other factors which affect the demand is constant.
Hence option c is the correct answer.
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