Suppose a Nation Is Currently Producing at a Point Inside

question 187

Multiple Choice

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

• A)the nation is producing beyond its capacity, so inflation will occur.
• B)the nation is not using all available resources or is using inferior technology or both.
• C)the nation is producing an efficient combination of goods.
• D)there will be a large opportunity cost if the nation tries to increase production of any good.

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Definitions:

Cost Of Goods Sold

A financial measure that calculates the cost incurred to produce products sold by a company, including materials and labor.

Gross Profit

The income a business earns once it subtracts the expenses involved in producing and marketing its goods, or the expenses related to delivering its services.

Other Revenue And Expenses

These refer to the income and costs that are not related to the main business activities of a company.

Purchases Account

An account used in the accounting for all goods bought for resale or for use in the production process.