If There Is Always a Three-For-One Trade-Off Between the Production

question 4

Multiple Choice

If there is always a three-for-one trade-off between the production of goods X and Y,then the production possibilities boundary for X and Y is

• A)a downward-sloping curve convex to the origin.
• B)semicircular.
• C)a downward-sloping straight line.
• D)a downward-sloping straight line that is broken at one point.
• E)a downward-sloping curve concave to the origin.

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Definitions:

Good Theory

A well-substantiated explanation of some aspect of the economic world that can predict outcomes and withstand empirical testing.

Forecasting Ability

The capability to predict future trends, events, or behaviors based on past and current data.

Complex Reality

The concept that reality is composed of many interacting components that can be difficult to fully understand or predict.

Economic Theory

A set of principles and models that attempts to explain the relationships among economic variables and to predict future economic outcomes.