Question

Question 3Multiple Choice Worth 4 points)

(01.02 MC)
A mechanic shop offers a 10-minute oill change and 30-minute brake check. There are two technicians who perform each of these services. Next week, the shop is offering a discounted oil
change. How might this promotion affect the production possibilities curve for next week?
O The shop would decrease the brake-check price to eliminate scarcity.
O The shop would increase worker pay to make up for the opportunity cost of not doing brake checks.
O The shop would shift production to oil changes and away from brake checks.
The shop would shift production to brake checks and away from oil changes.

Answer 1

The correct answer is: The shop would shift production to oil changes and away from brake checks.

When the mechanic shop offers a discounted oil change, it may lead to an increase in demand for oil changes and a decrease in demand for brake checks. In order to meet this increased demand for oil changes, the shop will likely shift its production towards oil changes and away from brake checks. This shift in production will be reflected on the production possibilities curve as a movement from the current production point towards a point with a higher quantity of oil changes and a lower quantity of brake checks.