Exhibit 2-10 Production possibilities curve data
A
B
C
D
E
Capital goods 0
1
2
3
4
Consumption goods25
23
19
13
0
Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. As additional units of capital goods are being produced, the number of consumption goods produced must:
A. increase because the production possibility table shows only the maximum efficiency points.
B. increase because of the law of increasing costs.
C. decrease because of the law of increasing costs.
D. decrease because of the finite nature of the resource base.
Answer: D
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As nominal Gross Domestic Product (GDP) rises, the transactions demand for money
A) decreases, and the money demand curve shifts to the left. B) remains constant, and the money demand curve remains the same. C) increases, and the money demand curve shifts to the left. D) increases, and the money demand curve shifts to the right.
Each of the following would decrease the demand for U.S. dollars, shifting the demand curve for dollars to the left, except:
A. a decrease in real GDP abroad. B. a decreased preference for U.S.-made goods. C. a decrease in the real interest rate on U.S. assets. D. a depreciation of foreign currencies relative to the U.S. dollar.