Allocative efficiency involves determining: A) which output-mix will result in the most rapid rate of economic growth. The decision to engage in one activity means forgoing some other activity. The law of increasing opportunity costs exists because: A) resources are not equally efficient in producing various goods. C. wage rates invariably rise as the economy approaches full employment. For example, airlines want to lower costs when oil prices rise to remain profitable. The best way to look at this is to review an example of an economy that only produces two things - cars and oranges. Resources can be easily moved from one industry to another. The “returns,” such as chip speed and cost-effectiveness, also increase exponentially. An increase in the price of hamburgers causes buyers to buy fewer hamburgers. B) the value of the dollar has diminished historically because of persistent inflation. The law of increasing opportunity costs states that: A. if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of another good to do so. Increases in the production of one good require larger and larger sacrifices … A nation's production possibilities curve is bowed out from the origin because: resources are not generally equally efficient in producing every good. B) the value of the dollar has diminished historically because of persistent inflation. o Because Felix does the laundry, Oscar should cook the meals. Law of Demand Explained . A government-set price floor is best illustrated by: If an effective ceiling price is placed on hamburgers, then: Other things equal, if the price of a key resource used to produce product X falls, the: product supply curve of X will shift to the right. When we produce something we use the most efficient resources first. Direct costs are actual, out-of-pocket payments for goods, services, or resources. is essentially: "In ways that minimize the cost per unit of output.". Answer: b Feedback: Resources are specialized. B. the value of the dollar has diminished historically because of persistent inflation. You could say, OK, as we increase-- especially if you did it on a unit basis, if you said every incremental berry or every incremental 100 berries we're going after, but the numbers aren't as easy right over here-- you'll actually see something going the other way. B)does not affect her production possibilities frontier. This preview shows page 14 - 16 out of 24 pages. Law of Diminishing Marginal Returns: The law of diminishing marginal returns is a law of economics that states an increasing number of new employees causes the marginal product of … If the output level is Q1, then there are efficiency losses indicated by the area. A nation can produce two products: steel and wheat. d. e. Contradicts the law … Whether one or both companies involved in a transaction are public or privat Convex: Increasing Cost (Click the [Convex] button): This is the standard convex production possibilities curve with increasing opportunity cost. Which of the following is a land resource? We normally draw a PPF on a diagram as concave to the origin i.e. If, say, you pay your staff overtime to meet a sudden rush in demand, the added salary cost means your cost per item goes up. D) consumers tend to value any good more highly when they have little of it. If Econ Isle transitions from widget production to gadget production, it must give up an increasing number of widgets to produce the same number of gadgets. Three alternatives help to illustrate the connection between opportunity cost and the shape of the production possibilities curve. They also don't want to cut flights. Indeed, the analysis indicates that disability insurance requirements add to a state’s cost-of-living index compared to states without this type of regulation. The term consumer sovereignty means that: What is produced is ultimately determined by what consumers buy. But there is no one-size-fits-all approach that’s a ringer for success. Allocative efficiency is concerned with: 107. Next lesson. Which of the following is not a typical characteristic of a market system? Indirect costs are, on the other hand, the opportunity costs of goods, services, or resources that are consumed, even though no direct payment for them occurs. The law of increasing opportunity costs explains: A) How everything becomes more expensive as the economy grows. When economists say that people act rationally in their self-interest, they mean that individuals: look for and pursue opportunities to increase their utility. Question: 1.The Law Of Increasing Opportunity Cost Explains Why A .opportunity Cost Is Constant Along The Production Possibilities Frontier B. B. the sum of the costs of producing a particular good cannot rise above the current market price of that good. B) The shape of the production-possibilities curve. And you could do it the other way. The $10.10 option would have substantially larger effects on employment and income than the $9.00 option would—because more workers would see their wages rise; the change in their wages would be greater; and, CBO expects, employment would be more responsive to a minimum-wage increase that was larger and was subsequently adjusted for inflation. S1 and D1 represent the current market supply and demand, respectively. Chip speed and cost-effectiveness, also increase exponentially involved in a series of designed. ” such as chip speed and cost-effectiveness, also increase exponentially 's answer to the right to. 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