If an Economy Is Operating at a Point Inside the Production

question 136

Multiple Choice

If an economy is operating at a point inside the production possibilities frontier, then

• A) society's resources are being used to produce too many consumer goods.
• B) economic policy must retard further growth of the economy.
• C) society's resources are being inefficiently utilised.
• D) the PPF curve will shift inward.

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Definitions:

Fixed Costs

Costs that do not vary with output.

Variable Costs

Costs that change as output levels change.

Marginal Costs

The additional cost incurred in the production of one more unit of a good or service.

Fixed Costs

Costs that do not change with the amount of goods or services produced, such as rent, salaries, or insurance.