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Author Question: Marginal utility theory predicts that a rise in the price of a banana results in A) the demand ... (Read 80 times)

scienceeasy

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on: Jun 29, 2018
Marginal utility theory predicts that a rise in the price of a banana results in
 
  A) the demand curve for bananas shifting rightward.
  B) the demand curve for bananas shifting leftward.
  C) a movement upward along the demand curve for bananas.
  D) a movement downward along the demand curve for bananas.

Question 2

The figure above represents the production possibilities frontier for a country. a) The nation is currently producing at point B and wants to move to point C.
 
  What is the opportunity cost of the move? b) The nation is currently producing at point B and wants to move to point A. What is the opportunity cost of the move?


patma1981

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

C

Answer to Question 2

a) By moving from point B to point C, the production of automobiles decreases by 1 million, from 3 million to 2 million. The 1 million decrease in automobiles is the opportunity cost of the movement.
b) By moving from point B to point A, the production of cameras decreases by 3 million, from 3 million to 0 million. The 3 million decrease in cameras is the opportunity cost of the movement.


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