PRINCIPLES OF MICROECONOMICS PROBLEMS Refer to the following diagr...

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PRINCIPLES OF MICROECONOMICS PROBLEMS Refer to the following diagram for questions 18-24 Military spending Civilian spending 18. Negatively sloped curve in economics generally connote: a. free markets b. tradeoffs c. decreasing opportunity cost d. no relation between dependent and independent variables 19. A production possibilities curve is "bowed out," or concave to the origin, because of: a. competition b. increasing opportunity cost/diminishing returns c. inefficiency and unemployment d. scarcity 20. A point inside the production possibilities curve would be characterized by: a. efficiency b. unemployment and/or inefficiency c. too much consumption d. positive trade-offs 21. What economic conclusion can be drawn from the PPC pictured above? a. any point on the PPC is equally Pareto efficient b. any point inside the PPC is more desired than any point on the PPC c. social spending is preferred to military spending d. military spending is vital while civilian spending is less important 22. Which assumptions are necessary in order to construct a PPC? a. technology and resources are fixed b. the ability to make choices important c. choices are limited to two variables d. all of the above 23. What characterizes any point outside the ppc? a. It is less desired than any point inside the ppc b. It is unattainable, given current technology and resources c. sacrificing consumption of one good leads to expanding beyond the ppc boundary d economic growth will not allow its eventual attainment 24. How would one best depict economic growth in a ppc model? a. construct a ppc with a positive slope b. a movement along the ppc c. an outward shift of the ppc d. construct a curve that is convex to the origin (or bowed in) Production Possibilities Curves 1. Status of the US Economy Investment Goods Consumption goods Indicate the current status of the US macroeconomy on the production possibilities curve with a dot. Explain why you placed the dot where you did.

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18. b. tradeoffs
19. b. increasing opportunity cost/diminishing returns...

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