The Law of Increasing Relative Costs, Depicted by the Concavity

question 163

Multiple Choice

The law of increasing relative costs, depicted by the concavity of the production possibilities frontier, is most closely related to the

• A)downward slope of the demand curve.
• B)upward slope of the demand curve.
• C)downward slope of the supply curve.
• D)upward slope of the supply curve.

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Definitions:

Miserly Friend

Refers to a person who is exceedingly frugal to the point of being stingy or tightfisted with money.

Interest Per Month

The amount of interest charged or earned on an account or loan, calculated on a monthly basis.

Borrowing

The act of obtaining funds from another party with the promise to repay the principal amount along with interest.

Compounded Annually

When interest is compounded annually, it means the interest earned on an investment is added to the principal at the end of each year, with future interest calculations based on the new total.