d, an inverse relationship exists between the price of a good and the amount pro

Question

d, an inverse relationship exists between the price of a good and the amount producers supply. yood ald the amount buyers choose to buy. between the price of a good and the amount buyers wish to buy. 10. An economic theory claims that a rise in gasoline prices will cause gasoline purchases to fall. s" means that paribus. The phrase a. other relevant factors like consumer incomes must be held constant b. the gasoline prices c. the theory is widely accepted but cannot be accurately tested. d consumers' need for gasoline remains the same regardless of the must first be adjusted for inflation. Exhibit 2-10 Production possibilities curve data apital goods 25 219 1 0 0 3 2 3 umption goods 11. Suppose a goods production will costunits of consumption goods, and the third unit of capital goods production will cost units of consumption goods. a. 4; 6 b. 25; 23 c. 23; 1 d. 1; 23 e. 2; 19

Explanation / Answer

a) Ceteris paribus means other factors held constant.

The answer is "A", here the income and other factors are held constant.

b) "A", 4 and 6, if we increase the production of the capital good we have to give up 4 and 6 consumption goods. as the production decreased from 23 to 19 (4) and then to 13 (6).

c) "D"

Point C is unachievable. to reach there the economy needs to increase the resource or improve the tech.

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