-The Figure Above Shows the PPFs for Jack and Jill

question 91

Multiple Choice

-The figure above shows the PPFs for Jack and Jill.Jack's PPF

• A) is also his marginal benefit curve.
• B) is also his marginal cost curve.
• C) shows the tradeoffs Jack faces between gallons of soda and gallons of bottled water.
• D) becomes the line labeled A after Jack trades with Jill.
• E) becomes non-existent after Jack trades with Jill.

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Definitions:

Allocative Efficiency

A state of resource allocation in which it is impossible to make any one individual better off without making at least one individual worse off.

Incentive Function

The role of rewards or penalties in motivating individuals or entities to behave in certain ways.

Rationing Function

The ability of market prices to allocate scarce resources among competing uses, ensuring that only those willing and able to pay the price can obtain the good or service.

Equilibrium Economic Rent

The additional income received by a factor of production, due to its scarcity or unique value, when the market is in equilibrium.