CHAPTER 2 -PRACTICE
1) The production possibilities frontier
A) is the boundary between attainable and unattainable levels of production.
B) illustrates why there need not be any scarcity in the world.
C) shows how production increases as prices rise.
D) shows prices at which production is possible and impossible.
E) is the boundary between what we want to consume and what we want to produce. 2) A situation in which resources are either unused or misallocated or both is represented in a production possibilities frontier diagram by
A) a point on or inside the production possibilities frontier.
B) a point outside the production possibilities frontier.
C) a point above or to the right of the production possibilities frontier.
D) a point inside the production possibilities frontier.
E) any point on either the horizontal or the vertical axis.

3) A medical clinic has 10 workers. Each worker can produce a maximum of either 2 units of medical services or 5 units of secretarial services a day. The production possibilities frontier of this firm would show
A) constant opportunity cost.
B) infinite opportunity cost.
C) decreasing opportunity cost.
D) increasing opportunity cost.
E) zero opportunity cost.

4) A medical clinic has 10 workers. Each worker can produce a maximum of either 2 units of medical services or 5 units of secretarial services a day. One day, the firm decides it would like to produce 16 units of medical services and 5 units of secretarial services. This output level is
A) costless.
B) attainable and efficient.
C) efficient.
D) inefficient.
E) unattainable.

5) If opportunity costs are increasing, then the production possibilities frontier
A) will be linear and have a negative slope.
B) will be bowed out and have a negative slope.
C) reflects the fact that available resources are equally useful in all production