As We Move Down the Bowed-Out Production Possibilities Frontier, Opportunity

question 108

Multiple Choice

As we move down the bowed-out production possibilities frontier, opportunity cost

• A)increases.
• B)decreases.
• C)remains constant.
• D)initially decreases, then increases.
• E)decreases but at an increasing rate.

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Definitions:

Producer Surplus

Producer surplus is the difference between what producers are willing to accept for a good or service and the actual price they receive, reflecting the profit earned above production costs.

Price

The sum of money anticipated, needed, or handed over in exchange for something.

Consumer Surplus I

The gap between what consumers are prepared and able to spend on a product or service and what they end up paying.

Price

The amount of money required to purchase a good or service.