The Production Possibilities Curve Represents the Fact That

question 55

Multiple Choice

The production possibilities curve represents the fact that:

• A) the economy will automatically end up at full employment.
• B) an economy's productive capacity increases proportionally with its population.
• C) if all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
• D) economic production possibilities have no limit.

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Definitions:

Fractional Numbers

Numbers that represent a part of a whole, typically written with a numerator and a denominator, such as 1/2 or 3/4.

Utility Function

A representation in economics of how a consumer prefences various goods or services, leading to choices that maximize their satisfaction or utility.

Compensating Variation

A measure of the amount of money needed to compensate an individual for a change in welfare or utility, keeping utility constant.

Pairs

Two things that are designed to be used together or are similar in nature, often considered as a unit.