Exhibit 15-1 Production Possibilities Curves

question 84

Multiple Choice

Exhibit 15-1 Production possibilities curves

In Exhibit 15-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. In Pada the cost of producing one more unit of corn is equal to:

• A) 3 units of wheat.
• B) 3 units of corn.
• C) 1/3 unit of wheat.
• D) 15 units of wheat.

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Definitions:

Marginal Cost

The cost of producing an additional unit of a good or service.

Average Total Cost

Represents the per-unit total cost of production, calculated by dividing the total cost by the total quantity produced.

Falling

The process or action of moving downwards, typically used in economics to describe a decrease in prices or values.

Short Run

In economics, the short run refers to a period during which at least one of a firm's inputs cannot be changed, limiting its capacity to adjust to demand changes.