When an Economy Is Producing Inside Its Production Possibility Frontier

question 182

Multiple Choice

When an economy is producing inside its production possibility frontier,

• A) production inefficiency occurs.
• B) only technological advances will allow it to increase production.
• C) it is efficient so long as it is producing what people want.
• D) it must overcompensate by producing outside the curve to achieve efficiency.

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Definitions:

Annual Cash Flows

The total amount of cash that a company receives and spends within one year.

Salvage Value

An asset's anticipated value at the end of its operational life, as estimated.

Straight Line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its useful life.