Question

1. Production possibility frontier usually exhibit _______ marginal _______.

2. The gain from specialization are limited by the extent of ___________.

3. We assume that production functions exhibit _______ marginal product of all inputs.

4. A _________ conveys ownership of company while a ______ entitles the owner to a fixed amount of money in the future.

5. A riskier bond will have a ________ price and a _______ rate of return.

Answer 1

1. Production possibility frontier usually exhibit diminishing marginal returns.
(PPF usually exhibit diminishing returns)

2. The gain from specialization are limited by the extent of market.
(Market limits gains from specialization)

3. We assume that production functions exhibit diminishing product marginal product of all inputs.
(Production function exhibits diminishing marginal product)

4. A share/stock conveys ownership of company while a bond entitles the owner to a fixed amount of money in the future.
(Stock means ownership of the company and bond is a guarantee to a fixed amount in the future)

5. A riskier bond will have a lower price and a higher rate of return.
(Due to high risk, prices are low but rate of return is high)