Use the Following to Answer Question

question 146

Multiple Choice

Use the following to answer question:

-(Figure: Production Possibilities and Circular-Flow Diagram) Use Figure: Production Possibilities and Circular-Flow Diagram.Assume the two figures represent the same economy.Suppose that in the circular-flow diagram there is a significant increase in the amount of human capital flowing to both coconut producers and fish producers.If all other variables remain unchanged,then the adjustment in this economy would be BEST represented in the production possibilities figure by a movement from point A toward:

• A)point A (no movement).
• B)point B (a decrease in coconut production and an increase in fish production).
• C)point C (a decrease in coconut production).
• D)point D (an outward shift of the entire curve).

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Definitions:

Fixed Costs

Costs that remain constant regardless of the amount of goods produced or units sold, including expenses like rent, wages, and insurance premiums.

Short Run

A period in economic analysis where at least one factor of production is fixed, limiting adjustments to changes in demand or supply.

Long Run

A period in economics sufficient for all markets to reach equilibrium, where all inputs and outputs can be varied by firms, not constrained by existing physical capital.