Question

The above table shows the daily production possibilities for a bakery. Currently the bakery bakes 60 pizzas and 210 loaves of bread, that is it is at alternative 21) 21) Using the above table, what is the opportunity cost of moving from alternative C to alternative B? A) 60 pizza pies B) 90 pizza pies C) 1/2 a loaf of bread D) 30 pizza pies 22) The relationship between quantity supplied and price is usually A) a negative relationship. B) a direct relationship. C) an inverse relationship. D) impossible to determine. 23) In deriving the demand schedule for a good, economists assume that A) reported income changes at each point on the demand schedule. B) consumers have equal incomes to allocate among goods. C) all other influences on demand except the product price are held constant. D) a consumer will allocate all of her income to one good.

Answer 1

21. The opportunity cost of moving to alternative B is 60 pizza pies because if the bakery produces the 210 loaves of bread than it cannot produce the 60 pizzas.

22. According to the law of supply, there is a positive relationship between the quantity supplied and price because at a higher price producer will supply more quantity as they will earn more on each quantity sold which will increase their profit. So the right answer is B.

23. The right answer is C because the demand schedule is derived from different price level.