Exhibit 2-4 Production Possibilities Curve Data In Exhibit 2-4, Choose the Best Production Alternative If the |

question 34

Multiple Choice

Exhibit 2-4 Production possibilities curve data $$\begin{array} { | l | r | r | r | c | c | } \hline & { \text { A } } &{ \text { B } } & \text { C } & \text { D } & \text { E } \\\hline \text { Capital goods } & 0 & 10 & 20 & 30 & 40 \\\text { Consumer goods } & 200 & 180 & 140 & 80 & 0 \\\hline\end{array}$$ In Exhibit 2-4, choose the best production alternative if the only goal of the economy is investment.

• A) A
• B) C
• C) E
• D) All production alternatives represent the same level of investment because all are efficient.

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Definitions:

Demand Occurs

The moment at which consumers are willing and able to purchase a good or service at a given price.

Long-Run Equilibrium

A state in which all factors of production and costs are variable, and firms in the industry are earning only normal profits, with no incentive for entry or exit.

Inferior Good

A good or service whose consumption declines as income rises, prices held constant.

Constant Costs

Costs that remain unchanged regardless of the level of production or activity.