The Following Figure Has Four Graphs Showing the Production Possibilities

question 7

Multiple Choice

The following figure has four graphs showing the production possibilities frontier for capital goods and consumer goods. Assuming an influx of immigrants benefits the production of both consumer and capital goods, which of the graphs below best illustrates the impact on the production possibilities frontier?

• A) a.
• B) b.
• C) c.
• D) d.
• E) b and d.

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Definitions:

Marginal Analysis

Marginal Analysis is an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity.

Relevant Costs

Only those costs that will be affected by a decision or action and therefore should be considered in decision-making.

Activity

In economic terms, refers to actions or engagements, such as production or consumption, within an economy.

Marginal Cost

The cost associated with the production of an extra unit of a product or service.