Question

All question about True or False.

1.A production possibilities frontier allows us to identify the opportunity cost of producing a particular good in an economy ( T/F)

2.In the circular flow model, people earn income and spend it on goods and services. The amount spent on the goods and services becomes profit for the firm. (T/F)

3.A production possibilities frontier identifies the relationship between the quantity of a good produced and the cost of producing that good. (T/F)

4.In Country A a worker can produce either 6 bushels of corn or 18 pounds of tomatoes in one day. In Country B a worker can produce either 4 bushels of corn or 16 pounds of tomatoes in one day. Country B has a comparative advantage in corn production. (T/F)

5.In Country A a worker can produce either 6 bushels of corn or 18 pounds of tomatoes in one day. In Country B a worker can produce either 4 bushels of corn or 16 pounds of tomatoes in one day. Country A has an absolute advantage in corn production.(T/F)

Answer 1

1) True. PPF shows all different combination of two goods which an economy can produce by utilising the resources efficiently. Thus from these combinafion, opportunity cost can be easily found out.

2) False because amount spent on goods is not profit because firms has to pay their factor of production prices.

3)False because PPF can be used to find opportunity cost.

4)opportunity cost of 1bushels of corn in country A=3pounds of tomatoes

Opp. Cost of 1 bushels of corn in country B=4pounds.

Thus country A has CA in corn production.

Ans is False

5)True because country A can produce more bushela of corn with samw worker.