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Author Question: How can the concepts of opportunity costs, scarcity and choice be illustrated by the production ... (Read 71 times)

DelorasTo

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on: Jun 29, 2018
How can the concepts of opportunity costs, scarcity and choice be illustrated by the production possibilities curve?
 
  What will be an ideal response?

Question 2

Professor's economics students are constructing models for how gasoline prices change. Maria's model has very realistic assumptions and is quite complex. Anna's model is less complicated and less realistic.
 
  Maria's model correctly predicts gas price increases 5 of the time. Anna's model predicts correctly 15 of the time. On the basis of usefulness or goodness, Professor will give which student's model the higher grade and why? A) Maria's model gets the higher grade because it is more complex.
  B) Anna's model gets the higher grade because it is simpler.
  C) Maria's model gets the higher grade because it is more realistic.
  D) Anna's model gets the higher grade because it predicts accurately more often.


Ahnyah

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The concept of opportunity cost is illustrated by movements along the production possibilities curve, meaning that producing more of one good necessarily means less production of another good. Scarcity represents a point on the PPC, but being unable to reach points beyond the PPC due to limited resources. Choice is represented by the actual point chosen on the PPC from all the possible production points on the PPC.

Answer to Question 2

D


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