When Producing at a Point of Production Efficiency

question 66

Multiple Choice

When producing at a point of production efficiency,

• A)our choice of goods to produce can be either on or inside the production possibilities frontier.
• B)we can satisfy all our wants.
• C)the opportunity cost of producing goods other than those measured on the axes of the production possibilities frontier is zero.
• D)we face a tradeoff and incur an opportunity cost.
• E)resources are either unused or misallocated.

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Definitions:

Diseconomies of Scale

A condition in which a firm experiences increased costs per unit when it scales up its production due to inefficiencies.

Output Q₁

A specific quantity of goods or services produced by a firm or economy at a given time, indicated as "Q₁" to denote a particular level of output.

Output Q₃

Refers to a specific quantity of output, often used in economic models to represent production levels at a particular point.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of operation and output increases.