Lecture 3/ Chapter 2

Question 1

Any point along the Production Possibilities Frontier curve shows

Answer 1

efficiency through the use of land labor and capital.

Question 2

A point within or under the area of the curve

Answer 2

curve is inefficient, meaning that resources are being wasted or used improperly.

Question 3

An Infeasible point, which is outside of the curve

Answer 3

means one can never achieve this with the current technology or resources available. It cannot happen.

Question 4

Shift outwards in the production possibility curve could be that

Answer 4

you have more land labor and capital, OR there has been an advance in technology which allows for a better use of resources to get more output from our input.

Question 5

Circular Flow Diagram

Answer 5

A visual model of the economy that shows how dollars flow through markets among households and firms. This system is virtually free of government intervention. This is known as an interactive market system

Question 6

Production Possibilities Frontier

Answer 6

A graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

Question 7

When economists are trying to explain the world

Answer 7

they are scientists

Question 8

When economists are trying to help improve it

Answer 8

they are policy advisers