Consider a nation with an endowment of iron ore and petroleum. If the nation specializes in the production of aluminum and gasoline instead of steel we can say that it is operating:
a. on its production possibilities curve.
b. outside its production possibilities curve.
c. inside its production possibilities curve.
d. on the highest achievable production possibilities curve.
e. on the lowest production possibilities curve.
c
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Suppose the actual and expected price levels in an economy are initially equal. However, the actual price level falls eventually due to a change in economic conditions. Which of the following will occur over the long run?
a. The economy will move rightward along the short-run aggregate supply curve. b. The economy will move leftward along the short-run aggregate supply curve. c. The short-run aggregate supply curve will shift to the right. d. The short-run aggregate supply curve will shift to the left. e. The short-run aggregate supply curve will become flatter.
Economists assume that, in general, when individuals are faced with two choices that have the same expected value, they will prefer:
A. the one with lower risk. B. the one with higher risk. C. the one with the higher opportunity cost. D. the one with the lower future value.