True/False Question 1. True. It is because resource is limited. If we want to produce more wheat, we must produce fewer tractors. 2. False. Point D is unattainable not only given the economy’s current resource endowment, but also the technology standard. 3. False. In moving from E to B, we produce more wheat and fewer tractors. So, more wheat is bought but fewer tractors are bought. 4. False. The slope of a tangent to point A is measuring the opportunity cost of moving another point to A. 5. True. It is because wheat directly satisfies consumer’s needs and wants. 6. False. If more tractors are produced, we need to produce less wheat. The cost of tractor production increases. 7. True. If more wheat is produced, we need to produce fewer tractors. The cost of wheat production increases. 8. False. We still can know which combination of output will actually be chosen. It is because we can decide the best combination of output by relying on comparisons of marginal benefits and marginal cost. 9. False. If resources are equally adaptable between two products in this economy, the PPC will be a straight line, not a concave curve.
10. False. Technological advance occurs not because of the economy becomes more capital intensive. It is the mistake of the relationship between cause and effect, they cannot be matched up.
11. True. The assumption assumes that the economy is operating at full employment. But it is on the normal situation, not considering the labor works over time. So, Point D is theoretically possible in the short run as long as labor works over time. If they work over time in a long time, they will feel tired and the productivity will decrease.
12. True. Under the assumption, every point on the curve is assumed as operating at full employment.
13. True. Under the assumption, every point on the curve is operating at full employment no matter how