The Figure Above Shows a Production Possibilities Frontier

question 1

Multiple Choice

The figure above shows a production possibilities frontier. In the figure, which of the following combinations of the two goods are efficient?

• A)4 million cell phones and 4 million DVDs
• B)2 million cell phones and 13 million DVDs
• C)5 million cell phones and 15 million DVDs
• D)No cell phones and 15 million DVDs
• E)None of these combinations is efficient.

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Definitions:

Savings And Loan Industry

A segment of the financial industry focused on accepting savings deposits and making mortgage and other loans to individuals and businesses.

Interest Rates

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Interest Rate Swap

A financial derivative contract in which two parties agree to exchange one stream of interest payments for another, based on a specified principal amount.

Fixed Rate

An interest rate that remains constant over the life of a loan or investment, unaffected by market fluctuations.