If an Economy Is Operating on Its Production Possibilities Frontier

question 112

Multiple Choice

If an economy is operating on its production possibilities frontier (PPF) , are there any unemployed resources in the economy?

• A)Yes, because if there weren't any unemployed resources the economy would be producing beyond its PPF.
• B)No, because if there were any unemployed resources the economy would be producing below its PPF.
• C)It depends on whether the economy's PPF is a concave (downward-sloping)curve or a straight line.
• D)Yes, because there are always some natural resources that are unemployed.

---

Definitions:

Inferior Good

A type of product whose demand decreases when the income of consumers increases and vice versa.

Demand Coefficient

A measure that indicates the sensitivity or responsiveness of the quantity demanded of a good or service to changes in its price.

Normal Good

A good for which demand increases as the income of individuals or the economy grows, and decreases when income falls.

Income Responsiveness

The degree to which demand for a product or service changes in response to changes in consumer income.