If an Economy Is Operating at a Point Inside the Production

question 145

Multiple Choice

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

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

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Definitions:

Upward-sloping

A term often used in economics to describe a line on a graph that shows an increase in a variable as another variable increases, such as supply or demand curves in relation to price.

Downward-sloping

A downward-sloping curve illustrates a negative relationship between two variables, commonly seen in demand curves where price and quantity demanded are inversely related.

Slope

The rate at which a line on a graph inclines or declines, indicating the relationship between two variables on a plotted curve.

Movement Along

The change in quantity demanded or supplied of a good due to a change in its price, represented graphically by a movement along a demand or supply curve.