When an Economy Is Operating Efficiently, the Production of One

question 338

Multiple Choice

When an economy is operating efficiently, the production of one more unit of a good will result in some loss of production of another good because

• A) technology can improve the production of only one good.
• B) the production possibilities frontier (PPF) shifts inward as more of only one good is produced.
• C) resources are limited, and efficiency implies that all resources are already in use.
• D) consumers will not want more of both goods.

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Definitions:

Net Operating Income

The profit realized from a business's operational activities, after deducting operating expenses but before interest and taxes.

Sales

The total amount of money received by a company for goods or services sold during a certain period of time.

Average Operating Assets

The average value of the assets used in a business's operational activities over a period.

Increase In Liabilities

An upward adjustment in the obligations a company owes to external parties, which could be due to loans, accounts payable, or other financial commitments.