Exhibit 2-4 -Point G in Exhibit 2-4 Is Efficient Because

question 99

Multiple Choice

Exhibit 2-4

-Point g in Exhibit 2-4 is efficient because

• A)the only way to increase production of A is by decreasing production of B
• B)the economy can increase production of both A and B from point b
• C)it is impossible to move to any other point along the production possibilities frontier
• D)it is impossible to move to any other point inside the production possibilities frontier
• E)no other production possibilities frontier exists

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Definitions:

World Price

The international market price at which goods are traded between countries; it plays a crucial role in determining local prices and trade policies.

Exported

Goods or services sent from one country to another for sale or trade.

Imported

Goods or services brought into one country from another for sale or use.

Producer Surplus

Producer surplus is the difference between what producers are willing to accept for a good or service and what they actually receive due to higher market prices.