92) The production possibilities curve tells us:
A) what specific combinations of two products is most desired by society.
B) that costs do not change as society varies its output.
C) costs are irrelevant in a society which has fixed resources.
D) what combinations of two goods can be produced with society's available resources.
93) When an economy is operating with maximum efficiency, the production of more of commodity A will mean the production of less of commodity B because:
A) of the law of decreasing opportunity costs.
B) material wants are insatiable.
C) resources are limited.
D) resources are not specialized and are imperfectly substitutable.
94) The production possibilities curve:
A) shows all of those levels of production which are consistent with a stable price level.
B) indicates that any combination of goods lying outside the curve is economically inefficient.
C) is a frontier between all combinations of two goods which can be produced and those combinations which cannot be produced.
D) shows all of those combinations of two goods which are most preferred by society.
95) The production possibilities curve illustrates the basic principle that:
A) the production of more of any one good will in time require smaller and smaller sacrifices of other goods.
B) an economy will automatically seek that level of output at which all of its resources are employed.
C) if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.
D) an economy's capacity to produce increases in proportion to its population size.
96) A production possibilities curve illustrates:
A) scarcity.
B) market prices.
C) consumer preferences.
D) the distribution of income.
97) A production possibilities curve shows:
A) that resources are unlimited.
B) that people prefer one of the goods more than the other.
C) the maximum amounts of two goods which can be produced assuming the full and efficient use of available resources.
D) combinations of capital and labour necessary to produce specific levels of output.
98) In drawing the production possibilities curve we assume that:
A) technology is fixed.
B) unemployment exists.
C) economic resources are unlimited.
D) wants are limited.
99) Which of the following is assumed in constructing a typical production possibilities curve?