If an Economy Operates at a Point Within Its Production

question 58

Multiple Choice

If an economy operates at a point within its production possibilities curve,

• A) it lacks the resources necessary to reach the curve.
• B) it is utilizing all of its resources efficiently.
• C) it does not confront the problem of scarce goods relative to unlimited wants.
• D) it is not efficiently using all of its resources.

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Definitions:

Aggregate Income

The total income earned by all individuals and entities within an economy.

Aggregate Consumption

The total amount of goods and services consumed in an economy within a given period.

Consumption Function

A mathematical expression describing the association between gross national income and the total amount spent on consumption.

Least Squares Estimates

Least squares estimates are those that correspond to the smallest sum of squared distances, or errors.