Which of the following is the most accurate statement about a production possibilities curve?
a. An economy can produce at any point inside or outside its production possibilities curve
b. An economy can produce only on its production possibilities curve.
c. An economy can produce at any point on or inside its production possibilities curve, but not outside the curve.
d. An economy can produce at any point inside its production possibilities curve, but not on or outside the curve.
c
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If the cross elasticity of demand between car insurance and new cars is -0.41, then car insurance and new cars are
A) complements. B) substitutes. C) normal goods. D) inferior goods. E) unrelated goods.
When the long-run average cost curve is downward sloping,
A) economies of scale are present. B) diseconomies of scale are present. C) the firm experiences constant returns to scale. D) the average fixed cost curve must be upward sloping. E) The premise of the question is wrong because long-run average cost curves never slope downward.