Production Possibility Frontier

Which of the following pairs does not match?

• Labour and wages

• Land and rent

• Entrepreneurship and profit

• Capital and profit

A trade-off is

• always in the social interest

• the benefit you receive from an increase in an activity

• giving up one thing to get something else

• the key to reconciling self-interest and social interest

Assume that a firm can produce 6 units of good X or 12 units of good Y per hour with its current resources. The opportunity cost of a unit of X is:

• 72 units of Y

• 12 units of Y

• 6 units of Y

• 2 units of Y

Resources in an economy:

• Are always fixed.

• Are limited at any moment in time.

• Always increase over time.

• Can never decrease

The sacrifice involved when you choose a particular course of action is called the:

• Alternative

• Consumer cost

• Opportunity cost

• Producer cost

If an economy is productively efficient:

• More of one product can only be produced if less of another product is produced

• The distribution of income is equal

• Everyone is wealthy

• Resources are unemployed

Economic growth can be shown by:

• An inward shift of the production possibility frontier

• A movement downward the production possibility frontier

• A movement up the production possibility frontier

• An outward shift of the production possibility frontier