How does an economy represented by a straight-line production possibilities curve differ from one represented by a traditional production possibilities curve with a bowed shape?
A) In the economy represented by a straight-line production possibilities curve, there is no opportunity cost.
B) In the economy represented by a straight-line production possibilities curve, neither good is scarce.
C) In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply.
D) In the economy represented by a straight-line production possibilities curve, changing the amount of resources devoted to the production of each good will not alter the amount of each good actually produced.
Ques. 2Ad valorem taxes
A) are not used in the United States.
B) are assessed as a percentage of a good's price.
C) are based on income levels.
D) are applied only to imports.
Ques. 3When income rises
A) demand for a normal good rises.
B) demand for a normal good falls.
C) demand for an inferior good rises.
D) quantity of a normal good demanded rises.
Ques. 4A situation in which the market system allocates too many resources to the production of a given activity is known as
A) market allocation.
B) market failure.
C) market efficiency.
D) market breakdown.
Ques. 5Sales taxes are
A) assessed on the prices paid on a large set of goods and services.
B) levied on purchases of a particular good or service.
C) based on each individual taxpayer's income level.
D) collected only by the U.S. government.
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