ECON2010 Business Economics Chapter 2 Quiz
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Questions and Answers

What does achieving production efficiency mean?

  • Producing the maximum quantity of goods possible at the lowest cost
  • Producing more of one good without producing less of some other good (correct)
  • Producing less of one good without producing more of some other good
  • Producing goods without considering opportunity costs

    • At a point inside the production possibilities frontier (PPF), what does it indicate?

  • Optimal resource usage
  • Production of goods at the lowest cost
  • Inefficiency in resource allocation (correct)
  • Maximum production efficiency

    • What does the concept of opportunity cost represent?

  • The cost of production for each additional unit of a good
  • The price consumers are willing to pay for a good
  • The total cost of all resources used in production
  • The value of the next best alternative foregone (correct)

    • When moving along the production possibilities frontier, what occurs to opportunity costs?

    <p>Opportunity costs increase</p> Signup and view all the answers

    What tradeoff is involved when making choices along the production possibilities frontier?

    <p>Giving up one good to get more of another</p> Signup and view all the answers

    What is the main purpose of a Production Possibilities Frontier (PPF)?

    <p>To show all possible combinations of goods and services that can be produced efficiently.</p> Signup and view all the answers

    What does a point outside the Production Possibilities Frontier (PPF) represent?

    <p>Unattainable production levels due to inefficiency.</p> Signup and view all the answers

    How does a Production Possibilities Frontier (PPF) demonstrate opportunity cost?

    <p>By illustrating the tradeoffs between different production possibilities.</p> Signup and view all the answers

    In the context of a Production Possibilities Frontier (PPF), what does 'ceteris paribus' mean?

    <p>Holding other factors constant except the ones being analyzed.</p> Signup and view all the answers

    What concept does the Production Possibilities Frontier (PPF) help in illustrating when focusing on two goods at a time?

    <p>Tradeoffs in production possibilities.</p> Signup and view all the answers

    What does the outward bow of the Production Possibilities Frontier (PPF) signify?

    <p>Increasing opportunity cost as quantity produced increases.</p> Signup and view all the answers

    Which statement best describes points along the Production Possibilities Frontier (PPF) according to the text?

    <p>Optimal production efficiency.</p> Signup and view all the answers

    What happens to the supply curve if the price of a good is expected to rise in the future?

    <p>It shifts leftward</p> Signup and view all the answers

    How does an increase in the number of suppliers affect the supply curve?

    <p>It shifts rightward</p> Signup and view all the answers

    What effect do advances in technology have on the supply curve?

    <p>It shifts rightward</p> Signup and view all the answers

    How does a natural disaster impact the supply curve?

    <p>It shifts leftward</p> Signup and view all the answers

    What is the result of improved production technology on the supply of energy bars?

    <p>Increases supply</p> Signup and view all the answers

    What happens in a market when the price is above the equilibrium price?

    <p>The quantity supplied exceeds the quantity demanded</p> Signup and view all the answers

    What happens when the market price falls below the equilibrium price?

    <p>There is a shortage of goods</p> Signup and view all the answers

    At the equilibrium price, what do buyers' and sellers' plans agree on?

    <p>Quantity demanded equals quantity supplied</p> Signup and view all the answers

    What happens in a market when there is a shortage due to an increase in demand?

    <p>Price rises, quantity supplied increases</p> Signup and view all the answers

    In a market experiencing a surplus as a result of an increase in supply, what happens to the price and quantity supplied?

    <p>Price falls, quantity supplied increases</p> Signup and view all the answers

    If both demand and supply increase simultaneously in a market, what happens to the price and quantity exchanged?

    <p>Price falls, quantity exchanged increases</p> Signup and view all the answers

    When demand decreases while supply increases in a market, what occurs to the price and quantity traded?

    <p>Price falls, quantity traded increases</p> Signup and view all the answers

    How do markets correct a surplus according to the text?

    <p>By lowering prices until demand equals supply</p> Signup and view all the answers

    What is illustrated by the Supply Schedule and Supply Curve?

    <p>The relationship between quantity supplied and price</p> Signup and view all the answers

    When does an increase in quantity supplied occur?

    <p>When the price of the good increases</p> Signup and view all the answers

    What happens to the supply curve when something other than price changes?

    <p>The supply curve shifts to the right or left</p> Signup and view all the answers

    How does a change in supply differ from a change in the quantity supplied?

    <p>A change in supply involves changes in factors other than price, while a change in quantity supplied only involves a price change.</p> Signup and view all the answers

    What occurs to the supply curve when supply increases?

    <p>The supply curve shifts rightward</p> Signup and view all the answers

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