When an Economy Is Producing Inside Its Production Possibility Frontier

question 182

Multiple Choice

When an economy is producing inside its production possibility frontier,

• A) production inefficiency occurs.
• B) only technological advances will allow it to increase production.
• C) it is efficient so long as it is producing what people want.
• D) it must overcompensate by producing outside the curve to achieve efficiency.

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Definitions:

Lump-sum Payment

A lump-sum payment is a single payment made at a particular time, as opposed to multiple payments over time.

Indifferent

In finance, this refers to a state or condition where a particular choice does not make one better or worse off than another choice.

Interest Rate

The fee levied by a lender on a borrower for asset utilization, calculated as a percentage of the principal value.

Compounded Monthly

A method of calculating interest where the interest earned each month is added to the principal, so that the balance doesn't merely grow, it grows at an increasing rate.