Points on the Production Possibilities Frontier Have the Property That

question 5

Multiple Choice

Points on the production possibilities frontier have the property that they

• A) are inherently unattainable.
• B) show the maximum amount of leisure that can be consumed for given amounts of goods consumed.
• C) show the maximum amount of goods that can be consumed for given amounts of government spending.
• D) show the maximum amount of leisure that can be consumed for given amounts of hours worked.
• E) show the maximum amount of goods that can be consumed in a competitive equilibrium.

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Definitions:

Entrepreneur's Forgone Interest

The potential income an entrepreneur sacrifices by investing resources in their own business rather than applying them elsewhere.

Marginal Product

The additional output resulting from the use of one more unit of a factor of production, holding other factors constant.

Marginal Cost

Refers to the increase in total cost that arises from producing one additional unit of a good or service.

Short-Run Cost Curves

Graphical representations that show how a firm's costs vary with output level in the short term, where at least one factor of production is fixed.