The Production Possibilities Frontier Demonstrates the Basic Economic Principle That

question 59

Multiple Choice

The production possibilities frontier demonstrates the basic economic principle that:

• A)market-based economies are more efficient.
• B)supply will determine demand in the economy.
• C)the production of more capital goods this year will cause the economy to produce fewer consumption goods next year.
• D)to produce more of any one thing, assuming full employment, the economy must produce less of something else.
• E)to produce more consumption goods this year requires the production of more capital goods this year.

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Definitions:

Managers

Managers are individuals in an organization responsible for directing and overseeing the work of a group of people towards the achievement of goals.

Residual Income

The income that exceeds the minimum rate of return, often used as a measure of the performance of investment centers within organizations.

Net Operating Income

Profit generated from a company's normal business operations, excluding deductions of interest and taxes.

Minimum Rate Of Return

The least expected rate of return on an investment necessary for it to be considered a viable option.