The Following Diagrams Show the Production Possibilities Boundaries for Austria

question 105

Multiple Choice

The following diagrams show the production possibilities boundaries for Austria and Switzerland,for the production of bicycles and shoes. FIGURE 32-2 Refer to Figure 32-2.Assume that Austria and Switzerland do not engage in international trade.In that case,

• A)Austria will produce all shoes and no bicycles.
• B)Switzerland will produce all bicycles and no shoes.
• C)each country will consume according to comparative advantage anyway.
• D)the downward-sloping lines illustrate each country's consumption possibilities.
• E)each country will produce according to comparative advantage anyway.

---

Definitions:

Slope

In mathematics, the measure of the steepness or incline of a line, often calculated as the ratio of the vertical change to the horizontal change between two points on the line.

Isocost

A line representing all combinations of inputs that have the same total cost.

Capital

Financial assets or the financial value of assets, such as cash or goods, used to generate income.

Isoquant

A curve on a graph representing combinations of inputs that result in the production of the same quantity of output, used in the analysis of production function and input optimization.