Exhibit 2-18 Production possibilities curves
In Exhibit 2-18, the production possibilities curves for a country are shown for the years Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This economy:
A. is worse off in Year Y than in Year X.
B. has stagnated production in this two year period.
C. is more efficient in Year Y than in Year X.
D. has shown growth between these two years.
Answer: D
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The marginal rate of substitution represents the maximum amount of one commodity a consumer is willing to give up in exchange for one more unit of another commodity
a. True b. False Indicate whether the statement is true or false
Arlene makes earrings in the shape of the mascot of a local university. Last year Arlene made 250 pairs of earrings, which she sold to the university bookstore for $10 each. Arlene works out of her home, so her only cost is $3 per pair for materials and $85 for tax help. If Arlene didn't produce earrings, she would spend her time babysitting her nephews and make about $500 per year. Which of the following is TRUE?