Consider a Production Possibilities Boundary Showing the Possible Combinations of Military

question 38

Multiple Choice

Consider a production possibilities boundary showing the possible combinations of military goods and civilian goods that a country can produce. Suppose that the country is currently at a point on the boundary. If the production of military goods is increased, the production of civilian goods will necessarily

• A)remain the same.
• B)decrease.
• C)increase.
• D)increase at a decreasing rate.
• E)increase at a increasing rate.

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Definitions:

Entire Industry Supply

The total quantity of a specific good or service that is available to consumers from all producers in a particular industry.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded, typically downward sloping to the right.

Corporate Hierarchy

A structure in corporations that defines the levels of authority, roles, and responsibilities from top management to lower-level employees.

Natural Monopoly

A natural monopoly occurs when a single firm can supply the entire market at a lower cost than could be achieved by multiple firms due to economies of scale.