True or False Questions and some are multiple choice if they have options under

Question

True or False Questions and some are multiple choice if they have options under

1.When a person is making a decision at the margin he or she is comparing the additional benefit of that activity to the additional cost of the proposed action

2. Macroeconomics deals with issues involving large corporations, while microeconomics exclusively deals with issues involving small businesses.

3.

Consider the following combinations of guns and butter that can be produced: 0 guns, 20,000 units of butter; 5,000 guns, 15,000 units of butter; 10,000 guns, 10,000 units of butter; 15,000 guns, 5,000 units of butter; 20,000 guns, 0 units of butter. The PPF between guns and butter is

a downward-sloping bowed-out curve

4. If supply increases and demand decreases, the supply and demand model predicts that equilibrium price will fall.

5.Productive efficiency implies that more of one good can not be produced without a loss of production of the other good.

6.

an increase in supply, higher equilibrium price, and higher equilibrium quantity

7.

8.A price floor set above the equilibrium price will result in a surplus.

9.A change in quantity demanded is caused by a change in

Explanation / Answer

(1) Scarcity is the fundamental problem

(2) True or False questions:

1 - True

2 - False

(3) PPF between gun & butter is a downward-sloping straight line (because, with every 5,000 unit decrease in one good corresponds to a 5,000 unit increase in the other, reflecting constant opportunity cost).

(4) True

Higher supply reduces price and lower demand also reduces price. The combined effect is a fall in price.

(5) True

(6) An increase in supply, lower equilibrium price, higher equilibrium quantity

(7) false

Opportunity cost is different among individuals.

(8) True

(Quantity supplied > quantity demanded)

(9) Price of product

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