-An Economy Produces at Point a on the PPF Shown

question 371

Multiple Choice

-An economy produces at point a on the PPF shown in the above figure. A drought reduces the amount of wheat produced and the economy produces at point b. The opportunity cost of a unit of wheat ____________.

• A) decreases
• B) increases
• C) is impossible to calculate without numbers on the axes
• D) remains the same

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Definitions:

Resource Allocation

The process of distributing available resources among various projects, processes, or units within an organization.

Levels of Activity

Refers to the intensity and volume of operations or actions within a given system or organizational area.

Predicting

The act of making educated guesses or forecasts about future events based on current or past information.