As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?
A) It remains constant.
B) It decreases.
C) It increases.
D) It might increase, decrease, or remain constant depending on how much people value the additional units of the good.
E) None of these depicts what happens to opportunity cost.
C
You might also like to view...
In monopolistic competition, when firms make an economic profit
A) the existing firms continue to make an economic profit in the long run because of product differentiation. B) new firms enter the industry so that the price falls and the economic profit eventually falls to zero. C) new firms enter the industry so that output decreases and the economic profit increases. D) new firms enter the industry so that output increases and the economic profit increases.
In a closed economy the marginal propensity to consume is 0.60 and the marginal propensity to invest is 0.10. What is the size of the multiplier?
A) 1.33 B) 2.33 C) 3.33 D) 0.70