Suppose a Nation Is Currently Producing at a Point Inside

question 121

Multiple Choice

Suppose a nation is currently producing at a point inside its production possibilities frontier. What do we know?

• A) The nation is producing beyond its capacity, and inflation will occur.
• B) The nation is not using all available resources and is inefficient.
• C) The nation needs improved technology in order to produce an efficient combination of goods.
• D) There will be a large opportunity cost if the nation tries to increase production.

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Definitions:

Price-elasticity Coefficient

A numerical measurement of the responsiveness of the quantity demanded or supplied of a product to a change in its price.

Sales Quantity

The cumulative amount of a product or service's units that are purchased over a specified time frame.

Price Increase

A rise in the cost of goods or services.

Quantity Demanded

The total amount of goods or services that consumers are willing and able to purchase at a given price level.