Opportunity cost reflected on a production possibilities curve is
A) the cost of reducing the output of one good in order to increase the output of another.
B) the rate at which people are willing to exchange goods as determined by demand and supply.
C) the dollar cost of the good given up to get another good.
D) independent of the slope of the curve.
Ans: A) the cost of reducing the output of one good in order to increase the output of another.
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The law of diminishing marginal returns implies that, in the short run:
a. output must fall beyond a certain point. b. price must fall beyond a certain point. c. the marginal product of the variable input must eventually decrease. d. wages of workers must eventually increase. e. total cost must fall beyond a certain point.
The marginal propensity to save plus the marginal propensity to consume always equals 1
a. True b. False Indicate whether the statement is true or false