The Production Possibility Curve Is Bowed Outward from the Origin

question 196

Multiple Choice

The production possibility curve is bowed outward from the origin because of:

• A) the law of increasing opportunity costs.
• B) the finite nature of the resource base.
• C) inefficiency.
• D) improper output mix.
• E) unemployment.

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Definitions:

Bogey Portfolio

An investment portfolio that serves as a benchmark against which other portfolios' performances are measured.

Geometric Average

A method of calculating the average rate of return of a set of values multiplicatively linked together, commonly used to determine the performance of investments over time.

Compounding Principle

The process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time.

Rate of Return

A percentage representing the gain or loss on an investment over a specified period, relative to its cost.