February 2016
Intermediate to advanced
504 pages
20h 37m
English
Content preview from Economics, 11th Edition
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ANSWERS TO “TEST YOUR UNDERSTANDING”
Chapter 1
The economy's production possibilities curve is shown by the solid line in the figure accompanying these answers.
- Twelve million units of capital goods (capital goods decreased from 32 to 20 million units); 10 million units of consumer goods (consumer goods decreased from 10 million units to zero).
- Point A is slightly to the left of the production possibilities curve, and point B is further to the left than point A.
- The location of point C depends on how one views the relative importance of capital goods and consumer goods. Point C will be closer to the horizontal axis if capital goods are considered to be relatively more important and closer to the vertical axis if consumer goods are considered to be relatively more important. Students put point C on the curve based on their opinions about the relative importance of capital goods and consumer goods.
- If only consumer goods were produced, no machinery or equipment would be produced to replace what is currently being used, and future production would be adversely affected. If only capital goods were produced, there would be nothing to sustain people currently.
- The production possibilities curve would shift to the right as illustrated by the lighter line in the accompanying figure.
Chapter 2
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- pure market; b. pure planned; c. mixed; d. pure market; e. pure planned; f. mixed
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I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.