1. A consequence of the economic problem of scarcity is that: All of the above.
ID: 1132930 • Letter: 1
Question
1. A consequence of the economic problem of scarcity is that:
All of the above.
2. Which of the following is an assumption under which the production-possibilities curve is drawn?
All of the above.
3. Which of the following correctly characterizes the shape of a production-possibilities curve?
A line that curves inward when resources are perfectly adaptable in the production of different goods.
4. If an economy is producing inside the production-possibilities curve, then:
It does not have enough resources to be efficient.
5. Which of the following events would cause the production-possibilities curve to shift outward?
An increase in the unemployment rate.
6. With an increase in labor productivity, there will be:
An inward shift of the production-possibilities curve.
7. The per capita GDP will always fall when:
The rate of economic growth is greater than the rate of population growth.
8. The government sets laws that require employers to pay at least a minimum wage to their low skilled workers. If the current minimum wage standard is set below the current equilibrium wage for low skill workers, it:
None of the above.
9. Which of the following definitely means productivity has decreased?
Less output from more workers.
10. When the production of a good creates external or social costs:
The production of goods and services must be controlled by the government.Explanation / Answer
1) Scarcity means that wants are unlimited but resources are limited. A consequence of the economic problem of scarcity is that: Choices have to be made about how resources are used because not all demands can be met with the limited resources.
2) The PPF is drawn under the assumption that supply of factors of production is fixed which sets the maximum limit of the combination of goods that can be produced by the economy.
3) The shape of the production possibility is concave to origin when the law pf increasing cost applies so to produce more of one good the economy has to give up more of the other good at a increasing rate.
4) If an economy is producing at a point inside the PPF then it means that the economy is fully using its resources so the economy is using resources inefficiently.
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