The Decision Rule for Constrained Optimization Is to Select the Level

question 23

Multiple Choice

The decision rule for constrained optimization is to select the level for each activity at which

• A) marginal benefit equals marginal cost for each activity.
• B) total benefit equals total cost for each activity.
• C) marginal benefit per dollar of marginal cost is equal across all activities.
• D) total benefit per dollar of total cost is equal across all activities.

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Definitions:

Production Possibilities Curve

A graph that shows the combinations of two goods that can be produced using all available resources and technology efficiently.

International Specialization

The economic strategy where countries focus on the production and export of goods and services that they can produce most efficiently.

Full Employment

An economic condition where all available labor resources are being used in the most efficient way possible, typically signifying a very low unemployment rate.

Productive Efficiency

A state where an economy or firm produces goods or services at the lowest possible cost, using all resources effectively.