The Production Possibilities Curve Illustrates the Basic Principle That

question 4

Multiple Choice

The production possibilities curve illustrates the basic principle that

• A) an economy's capacity to produce increases in proportion to its population.
• B) if the resources of an economy are being used efficiently, more of one good can be produced only if less of another is produced.
• C) an economy will automatically seek the output at which all of its resources are fully employed.
• D) the distribution of income among households is the major determinant of the economic welfare of a nation.

---

Definitions:

Finished Goods Inventory

This refers to the value of goods in a company's inventory that are completed and ready for sale.

Merchandise Inventories

Goods that a company holds for the purpose of sale in the ordinary course of business, including finished products, work in progress, and raw materials.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor expenses.

Monthly Expenses

Recurring costs or outlays that occur every month, such as rent, utilities, payroll, and other operational charges.