112-1 W1_Econ

An economy’s production of two goods is efficient if

• 1. all members of society consume equal portions of the goods.

• 1. the goods are produced using only some of society’s available resources.

• 1. it is impossible to produce more of one good without producing less of the other.

• 1. the opportunity cost of producing more of one good is zero.

When constructing a production possibilities frontier, which of the following assumptions is not made?

• 1. The economy produces only two goods or two types of goods.

• 1. Firms produce goods using factors of production.

• 1. The technology available to firms is given.

• 1. The quantities of the factors of production

     that are available are increasing over the relevant time period.

In the circular-flow diagram, which of the following is not a factor of production?

• labor

• land

• capital

• money

What is the opportunity cost of moving from point A to point B, based on Figure 1?

• zero

• 6 clocks

• 6 clocks and 15 candles

• 15 candles

Refer to Figure 1. This economy has the ability to produce at which point(s)?

• A, B

• A, B, D

• A,B,C,F,G

• C,F,G