Suppose That a Country Is Producing on Its PPC at a Point

question 17

Multiple Choice

Suppose that a country is producing on its PPC at a point to the left of the tangency between the trade line and the PPC.At the production point,

• A)the opportunity cost in production of the good on the horizontal axis is less than its trade price.
• B)the opportunity cost in production of the good on the horizontal axis is more than its trade price.
• C)the opportunity cost in production of the good on the vertical axis is less than its trade price.
• D)the opportunity cost in production of the good on the horizontal axis may be either less than or more than its trade price.
• E)the opportunity cost in production of the good on the vertical axis equals its trade price.

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Definitions:

"A bird in hand"

A principle implying that it is better to have a certain, smaller benefit now than a possibility of a greater benefit later, often used in dividend policy discussions.

Future Earnings

Projected or anticipated profits a company expects to earn in future periods, often used for valuation purposes.

Short-Term Benefit

Refers to immediate rewards or perks provided to employees, including bonuses, sick leave, and temporary incentives.

Long-Term Benefit

Advantages or positive outcomes that accrue over an extended period, often associated with investments or strategic business decisions.