Compare two economies A and B that start out with identical production possibilities curves. Economy A chooses an efficient point with 6 consumption goods and 3 capital goods, while economy B also chooses an efficient point, but with 4 consumption goods and 5 capital goods. In the future we can predict:
a. economy A will operate inefficiently.
b. economy B will operate inefficiently.
c. economy A and economy B will grow equally fast.
d. economy A will grow faster than economy B.
e. economy B will grow faster than economy A.
QUESTION 2If an economy keeps increasing its capital stock, then over time its production possibilities curve will:
a. not move.
b. shift to the left.
c. shift to the right.
d. disappear because scarcity ceases to exist.
e. demonstrate massive job loss for workers.
QUESTION 3Adding more resources causes:
a. downward movement along a production possibilities curve.
b. the production possibilities curve to shift in.
c. upward movement along a production possibilities curve.
d. the production possibilities curve to shift out.
e. the production possibilities curve to become positively sloped.
QUESTION 4Which of the following would not lead to a shift in an economy's production possibilities curve?
a. Change in technology.
b. Change in the number of resources.
c. An earthquake.
d. Improvement in the education level.
e. Change in the composition of current output.
QUESTION 5The ability of an economy to produce greater levels of output in the same period of time is called:
a. positive economics.
b. negative economics.
c. economic growth.
d. marginal productivity.
QUESTION 6Over time, an increase in a nation's stock of physical capital will:
a. shift the production possibilities curve inward.
b. cause an economy to operate inside its production possibilities curve.
c. shift the production possibilities curve outward.
d. eliminate the basic economic problem of scarcity.
QUESTION 7Suppose that an economy can produce various combinations of fish and bread. If more people with strong fishing skills became employed in this economy, how would the production possibilities curve (PPC) change?
a. The PPC would shift outward on the fish axis, but would not change on the bread axis.
b. The PPC would shift outward equally along both the fish and the bread axes.
c. The PPC would shift inward on the bread axis, but would not change on the fish axis.
d. The PPC would shift inward equally along both the fish and the bread axes.
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