A certain production possibilities frontier shows production possibilities for two goods, jewelry and clothing. Which of the following concepts cannot be illustrated by this model?
a. the flow of dollars between sellers of jewelry and clothing and buyers of jewelry and clothing
b. the tradeoff between production of jewelry and production of clothing
c. the opportunity cost of clothing in terms of jewelry
d. the effect of economic growth on production possibilities involving jewelry and clothing
a
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In the short run, an increase in the price level induces firms to expand production because
A) they can increase profits by increasing maintenance costs. B) higher prices allow firms to hire more inputs by offering higher prices for inputs, which increases productivity and profits. C) each firm must keep its production level up to the level of its rivals, and some firms will expand production as the price level increases. D) prices of inputs are held constant, so the higher prices for firms' products imply that it is profitable to expand production.
The figure above shows the market for college education. Left to itself without any government intervention, a competitive market would create a deadweight loss equal to
A) zero. B) the area d. C) the area a + c. D) the area b + c. E) the area b + d.