Question

1. Suppose that the income of Maya is expected to increase in the future. The result is that  

1. The demand might increase now

2. The current supply of the product increases  

3. The demand might decrease now

4. The current supply of the product decreases  

2. The production possibilities frontier separates ________.

A) the goods and services that people want from those that they do not want

B) the types of goods that can be attained from those that can't be attained

C) the quantities of goods and services that can be produced from those that cannot be produced

D) the combinations of goods that people value and those that they don't

3. Lisa demands more Cheese as her Income increases, from this we can conclude that, for Lisa:

1. Cheese is a normal good

2. Cheese is an inferior good

3. Cheese is a complementary good

4. Cheese is a substitute good

4. An efficient allocation of resources occurs when we

A) produce the goods and services that people need.

B) cannot produce more of a good or service without giving up some other good or service that we value more highly.

C) produce the goods and services that people want.

D) cannot produce more of a good or service without giving up some other good or service that we need.

Answer 1

1. The demand might increase now

Explanation: The demand for goods and services might increase at present with anticipation of an increase in the income in the future.

2. C) the quantities of goods and services that can be produced from those that cannot be produced

Explanation: The points inside or on the production possibility curve can be produced. The points outside the curve cannot be produced because of the scarcity of resources.

3. Cheese is a normal good

Explanation: The demand for normal goods increases with an increase in income and decreases with a fall in income.

4. B) cannot produce more of a good or service without giving up some other good or service that we value more highly.

Explanation: Resources are efficiently allocated when production takes place according to consumer preference; therefore, we cannot produce more of a good or service without giving up some other good or service that is more highly valued by consumers.