These Figures Illustrate the Production Possibilities Available to Barney and Betty

question 121

Multiple Choice

These figures illustrate the production possibilities available to Barney and Betty with 8 hours of labor in their baker
Figure 3-4

-Refer to Figure 3-4.If Barney and Betty both specialize in the good in which they have a comparative advantage,

• A)total production of bread will be 7 and total production of pies will be 15.
• B)total production of bread will be 20 and total production of pies will be 14.
• C)total production of bread will be 27 and total production of pies will be 29.
• D)total production of bread will be 40 and total production of pies will be 22.

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Definitions:

Marginal Utilities

The increased contentment or value obtained by a consumer through the consumption of one extra unit of a good or service.

Diminishing Marginal Utility

The principle that as a person increases consumption of a product, there is a decline in the marginal utility that person derives from consuming each additional unit of that product.

Income Effect

The change in an individual's or economy's income and how that change will affect the quantity demanded of a good or service.

Substitution Effect

The change in demand for a good that results from a change in its price, making consumers more likely to purchase more of a less expensive alternative or less of a more expensive one.