A Bowed Outward Production Possibilities Frontier Occurs When

question 210

Multiple Choice

A bowed outward production possibilities frontier occurs when

• A) opportunity costs are constant.
• B) resources are not scarce.
• C) as more of a good is produced, producing additional units of it require greater reductions in the other good.
• D) the society is operating on the production possibilities frontier.

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Definitions:

Relative-price Variability

The fluctuation in prices of goods and services relative to each other over time, often influenced by various economic factors.

Misallocation

The inefficient distribution or use of resources, often leading to suboptimal economic outcomes.

Nominal Gain

The increase in the monetary value of an asset or investment without adjusting for inflation, representing a simple difference in price.

Real Gain

The increase in value or profit after adjusting for inflation or other external factors that affect purchasing power.