The Fact of Increasing Opportunity Cost When Moving on the PPF

question 32

Multiple Choice

The fact of increasing opportunity cost when moving on the PPF means that

• A) to increase the production of one product requires larger and larger sacrifices of the other good.
• B) to decrease the production of one product requires smaller and smaller sacrifices of the other good.
• C) to increase the production of one product requires smaller and smaller sacrifices of the other good.
• D) when the government forces a movement from one point on the PPF to another point, no production is lost.
• E) the PPF will be a negatively sloped straight line.

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Definitions:

Income Elasticity

A measure of how much the quantity demanded of a good or service changes in response to a change in consumers' income.

Inferior Good

A type of good whose demand decreases when consumer income rises, unlike normal goods, which see an increase in demand with rising income.

Income Elasticity

A measure of how much the quantity demanded of a good responds to a change in consumers' income.

Labor-supply Curve

A graphical representation showing the relationship between the wage rate and the quantity of labor workers are willing to supply.