A Production Possibilities Frontier Is a Line or Curve That

question 111

Multiple Choice

A production possibilities frontier is a line or curve that:

• A) shows all the possible combinations of outputs that can be produced using all available resources.
• B) shows what should be produced when all available resources are efficiently used.
• C) shows the best combinations of outputs that can be produced using all available resources.
• D) explains why societies make the choices they do.

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Definitions:

Excess Capacity

A situation where a firm produces at a level less than its maximum output, often resulting in inefficiencies or higher production costs per unit.

Monopolistically Competitive

A market structure where many firms sell products that are similar but not identical, allowing for some degree of market power in setting prices.

Average Total Cost

The total cost of production divided by the number of units produced, indicating the cost per unit of output.

Marginal Cost

The additional cost incurred by producing one more unit of a product or service, an essential concept for understanding optimal production levels and pricing strategies.