1. What is the difference between macroeconomics and microeconomics
a. #Macroeconomics is a study of the economy as a whole and microeconomics is a study of individual decision makers like households and firms
b. There is no difference between the two
2. Why garbage is not scarce even though it exists in limited quantities?
a. #because the wants do not exceed the limited availability. At the price of zero we have more than we need.
b. because there is a potential demand for garbage
3. A point on a nation’s production-possibilities curve indicates:
a. An undesirable combination of goods and services.
b. Combinations of production that are unattainable, given current technology and resources.
c. Levels of production that will cause both employment and inflation.
d. #That resources are fully employed in producing a particular combination of goods and services.
4. A production possibilities frontier with a bowed out shape indicates which of the
a. The possibility of inefficient production.
b. Constant opportunity costs as more and more of one good is produced.
c. #Increasing opportunity costs as more and more of one good is produced.
d. Falling opportunity costs as more and more of one good is produced.
5. Can a country have absolute advantage in the production of all goods?
6. Can a country have a comparative advantage in the production of all goods?
The next two questions relate to the following setup. Using the same amount of resources Germany can produce 2 cars or 4 MP3 players and US can produce 3 cars or 9 MP3 players.
7. What is the opportunity cost of producing cars in Germany?
e. None of the above
8. Which country has a comparative advantage in the production of cars?
c. None of the above
The following four questions are related to the figure below. Using the same amount or resources the US and Canada can both produce...