Question

A society that is producing its maximum combination of goods and using all available resources for production

a	is operating outside its PPF.

b	has maximized its opportunity cost.

c	has eliminated scarcity.

d	is operating on its production possibilities frontier (PPF).

e	has minimized its opportunity cost.

Dawn’s family runs a business selling white paper used in photocopiers. Dawn notices that she is under intense pressure to lower prices. Why is this occurring?

a	Prices are falling because some companies make and sell more paper than others.

b	Prices are falling because there are only a few companies that sell and make paper, but there are many different kinds of customers who buy paper.

c	Prices are falling because fewer people are photocopying.

d	Prices are falling because although there are many companies that make and sell paper, there are only a few customers that purchase large amounts of paper.

e	Prices are falling because there are many companies who make and sell paper and different kinds of customers for this paper.

If someone searches for a flight between Los Angeles and Chicago, he or she will find different airlines offering flights at similar prices. Why does this occur?

a	This occurs because one airline offers more flights at more convenient times than other airlines.

b	This occurs because the cities are far away from each other and not many would choose to drive between the two cities.

c	This occurs because the flights are filled primarily with workers from the largest 10 companies in each of the cities.

d	This occurs because there are many airlines and many different kinds of customers.

e	This occurs because passengers only pick those airlines where they collect frequent flyer miles.

Answer 1

1. A society that is producing its maximum combination of goods and using all available resources for production is operating on its production possibilities frontier (PPF).

Ans is d) is operating on its production possibilities frontier (PPF).

2. Dawn's family runs a business selling white paper used in photocopiers. Dawn notices that she is under intense pressure to lower prices. Why is this occurring?

Prices are falling because there are many companies who make and sell paper and different kinds of customers for this paper.

Ans is e)

3. If someone searches for a flight between Los Angeles and Chicago, he or she will find different airlines offering flights at similar prices. Why does this occur?

This occurs because there are many airlines and many different kinds of customers

Ans is d)