C) maximum combinations of goods attainable with fixed resources
D) the amount of goods attainable if prices decline
85) The production possibilities curve represents:
A) the maximum amount of labour and capital available for production.
B) combinations of goods and services among which consumers are indifferent.
C) maximum combinations of products available with fixed resources and technology.
D) the maximum rate of growth of capital and labour in an economy.
86) The construction of a production possibilities curve assumes:
A) the quantities of all resources are fixed in the short run.
B) technology is not fixed.
C) there is no unemployment.
D) there is no government.
87) Assume an economy is operating at some point on its production possibilities curve which shows civilian and military goods. If the output of military goods is increased, the output of civilian goods:
A) will remain unchanged.
B) may be either increased or decreased.
C) must be decreased.
D) must also be increased.
88) The production possibilities curve shows:
A) the various combinations of two goods which can be produced when society uses its scarce resources efficiently.
B) the minimum outputs of two goods which will sustain a society.
C) the various combinations of two goods which can be produced when some resources are unemployed.
D) the ideal, but unattainable, combinations of two goods which would maximize consumer satisfactions.
89) The negative slope of the production possibilities curve is a graphical way of indicating that:
A) any economy "can have its cake and eat it too."
B) to produce more of one product we must accept less of another.
C) the principle of increasing opportunity costs does not apply to the economy as a whole.
D) consumers buy more when prices are low than they do when prices are high.
90) If an economy is operating on its production possibilities curve for consumer goods and capital goods, this means that:
A) it is impossible to produce more consumer goods.
B) resources cannot be reallocated between the two goods.
C) it is impossible to produce more capital goods.
D) more consumer goods can only be produced at the cost of fewer capital goods.
91) In drawing a production possibilities curve we hold constant:
A) the money supply.
B) the consumer price index.
C) both technology and resource supplies
D) resource supplies only.