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Question 8 Figure 1 Hot yet Points out of Flag question Refer to Figure 2-1. In order to reach point the economy would have to Select one: O a acquire more resources or experience a technological advance. O b. begin using its available resources more efficiently than it is currently using them O c shift resources away from the production of ribeye steaks and toward production of books O d. None of the above are correct the economy will never be able to reach point Question 9 Figure 1 more woks are produced the opportuny cool anakan Refer to Figure 2-1. For this economy as more and more books are produced.th produk terseys Select one O a remains constant Ob increases decreases O d. This cannot be determined from the graph

Answer 1

1. Production possibility curve shift to the right when the availability of resources increase or technology improves. To reach point ‘C’ there must be an improvement in technology or increase in resources in the economy.

Answer: a. acquire more resources or experience a technological advancement.

2. The shape of the production possibility curve depends upon the nature of opportunity cost. Under increasing opportunity cost the production possibility curve is convex to the origin (bowed in). Under decreasing opportunity cost the production possibility curve is convex to the origin (bowed out). When the opportunity cost of producing an additional unit is constant the production possibility curve is will be a straight-line.

Answer: b. Increases.

3. The demand curve shows the various quantities of a commodity demanded at different prices. It is the locus of points of different prices and different quantity demanded.

Answer: d. price is on the vertical axis and quantity demanded is on the horizontal axis.

4. Market demand curve is the summation of the individual demand curve. It represents the total quantity of a commodity demanded by all the buyers in the market at various prices.

d. represents the sum of the quantities demanded by all the buyers at each price of the good.

5. Answer: a. (quantity demanded =2, price is 1.50). (This question is incompletely shown).

6. The demand curve of a commodity shift when there is a change in factors other than price like change in price of related goods(complementary and substitute), change in taste and preferences, income of the consumer and expectations. While price changes, the demand curve does not shift, but there is a movement on the demand curve.

Answer: a. a decrease in the price mp3 players.