(Figure: Fishing Charters and Parachute Jumps I) Francis Spends His

question 142

Multiple Choice

(Figure: Fishing Charters and Parachute Jumps I) Francis spends his income on fishing charters and jumping out of airplanes. Which of the following statements is TRUE?

• A) Fishing charters are an inferior good.
• B) An increase in income could cause the optimal consumption bundle to move from point A to point B.
• C) Parachute jumps are an inferior good.
• D) An increase in the price of parachute jumps could cause the optimal consumption bundle to move from point A to point B.

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Definitions:

Productivity

The measure of the efficiency of production, often defined as the ratio of output to inputs in the production process.

Constant Returns To Scale

A situation in production where an increase in the input of resources leads to a proportionate increase in output, resulting in no change in average costs.

Production Function

The relationship between the quantity of inputs used to make a good and the quantity of output of that good.

Inputs

Resources such as labor, materials, and capital that are used in the production process to create goods or services.