Indifference Curve and PPF

Which of the following statements is NOT TRUE of indifference curves?

• They are downward sloping.

• They could intersect.

• They are convex to the origin.

Indifference curves is

• are non-intersecting.

• are contour lines of a utility function.

• are negatively sloped.

• all of the above.

Which of the following best describes the three fundamental economic questions?

• What to produce, when to produce, and where to produce?

• What time to produce, what place to produce, and how to produce?

• What to produce, how to produce, and for whom to produce?

A production possibilities curve shows the various combinations of output:

• Consumers would like to consume.

• Producers would like to produce.

• An economy can produce.

TRUE OR FALSE: Inward shifts in the production-possibilities curve represents economic growth.

• False

• True

Which point represents underutilization?

• A

• C and E

• C

• E

Using resources in such a way as to maximize the production of goods and services is called

• efficiency.

• growth.

• thinking at the margins.

An efficient economy is one that

• is experiencing underutilization.

• Has production inside the boundaries of it’s production possibilities frontier.

• uses its resources to make the most goods and services.

In the time period covered by the production possibilities curve, the company decides to make 4 gallons of red paint. How many gallons of blue paint can the company make with the available time and resources?

• 2

• 3

• 4

• 8

Which of the following choices best describes what this production possibilities frontier is depicting?

• economic growth

• alternative possibilities

• opportunity cost