The Diagram Below Shows Two Production Possibilities Boundaries for Country

question 105

Multiple Choice

The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4 Refer to Figure 1-4.An outward shift of the production possibilities boundary from to indicates which of the following?

• A)an increase in the price of raw materials for consumer goods
• B)growth in the country's productive capacity
• C)an increase in the price of raw material for capital goods
• D)more of the country's resources are being used
• E)the country's resources are being used less efficiently

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Definitions:

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent, salaries, and insurance.

Pretax Income

The amount of income earned by a business before paying income taxes.

Variable Costs

Expenses that change in proportion with the level of production or business activity, such as materials and labor directly involved in manufacturing.

Fixed Costs

Costs that remain constant for a set period of time, regardless of changes in the level of activity or volume of output.