The Chunnel auto tunnel allows motorists to travel between England and France. As an alternative, there is ferry service across the English Channel. What would happen in the market for ferry service if fees for using the Chunnel were increased?
A) The demand for ferry service would increase.
B) The demand for ferry service would decrease.
C) There would be an upward movement along the demand curve for transits through the Chunnel.
D) There would be a downward movement along the demand curve for transits through the Chunnel.
Answer: A
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The law of increasing opportunity cost reflects the fact that
a. the production possibilities frontier is bowed inward b. resources are not perfectly substitutable c. resources cannot always be used efficiently d. an economy will operate at a point inside the production possibilities frontier e. an economy will operate at a point along the production possibilities frontier
Any movement along the production possibilities frontier involves the production of
a. more of both goods b. more of one good and less of the other c. less of both goods d. more resources e. better technology