If an economy is operating at a point inside the production possibilities frontier, then
A) society's resources are being inefficiently utilized.
B) the PPF curve will shift inward.
C) society's resources are being used to produce too many consumer goods.
D) economic policy must retard further growth of the economy.
A
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When government provides a good with an external benefit, to attain efficiency the price paid by consumers is set equal to the
A) marginal private benefit at the efficient level of output. B) marginal private cost at the efficient level of output. C) amount paid by taxpayers. D) market-determined price. E) marginal external benefit at the efficient level of output.
If the price of pizza increases, the quantity of pizza demanded will fall because some consumers will switch to tacos, hamburgers, or submarine sanwiches. This is called the:
a. income effect b. the alternative effect c. the substitution effect d. the normal good effect