Question

Kindly answer the following questions please

The following are correct descriptions about the Production Possibility Frontier model (PPF), EXCEPT:

Question 5 options:

	A) It is the maximum combination of production that can be attained using all the economic resources available.
	B) Any point on the PPF is considered to be efficient.
	C) Any point on the PPF is considered to be optimal.
	D) In a linear PPF, the opportunity cost per unit produced of any good is constant.

A concave production possibility frontier between goods x and y indicates the following, EXCEPT:

Question 6 options:

	A) Constant opportunity cost in the production of any good at any level.
	B) Increasing opportunity cost in the production of good x.
	C) Increasing opportunity cost in the production of good y.
	D) As we produce more or any good, we have to give up more of the other good.

The following are correct statements about Comparative and Absolute Advantages, EXCEPT:

Question 8 options:

	A) Having Absolute Advantage means to be able to produce more than others, with same economic resources.
	B) Having Comparative Advantage means being able to produce with the lowest opportunity cost than others.
	C) Having Absolute Advantage in one type of production implies having also Comparative Advantage in that type of production.
	D) For the case of two goods and two individuals, one individual cannot have Comparative Advantage in the production of both goods.

The following are correct statements about Gains from Trade, EXCEPT:

Question 9 options:

	A) When individuals (or economies) specialize in their absolute advantages, maximum efficiency is attained.
	B) An economy that is labor-abundant will tend to have comparative advantage in the labor-intensive type of production.
	C) Even if one economy has absolute advantage in all kind of production, it could benefit from trade.
	D) Specialization and Trade based on comparative advantages can generate a pareto optimal conditon.

The following are factors that could possibly Shift Up the current Demand Curve for certain good X, EXCEPT:

Question 12 options:

	a) An increase in income, assuming x is a normal good.
	B) An increase in price of a complement for good x.
	C) An increase in the price of a substitute for good x.
	D) An expected future increase in price per unit of good x.

Answer 1

5. Any point on the PPF is considered to be optimal is not a correct description about the PPF. Hence, option(C) is correct.

6. A concave PPF indicates all of the following except constant opportunity cost in the production of any good at any level. Hence, option(A) is correct.

8. Having absolute advantage in one type of production implies having also comparative advantage in that type of production is not a correct statement because absolute advantage does not always implies comparative advantage in that good. Hence, option(C) is correct.

9. All statements are correct about gains from trade except when individuals specialize in their absolute advantages, maximum efficiency is attained because maximum efficiency is attained when individuals specialize in their comparative advantages. Hence, option(A) is correct.

12. All would shift the demand curve up for good x except an increase in the price of a complement for good x because it would decrease the demand for good x and shifts the demand curve down . Hence, option(B) is correct.