FIGURE 12- 2 the Production Possibilities Boundary Shows Possible Combinations

question 54

Multiple Choice

FIGURE 12- 2 The production possibilities boundary shows possible combinations of guns and butter that can be produced by a country.The lower diagram shows demand and supply for butter.

-Refer to Figure 12- 2.Suppose demand and supply for butter are shown by D and S,respectively.And suppose the economy is at point (a) on the production possibilities boundary.How can this economy move toward allocative efficiency?

• A)increase the supply of guns
• B)expand the production possibilities boundary outward
• C)produce less butter,more guns
• D)produce more butter,less guns
• E)increase the demand for butter

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