Refer to the Following Figure to Answer the Questions That

question 58

Multiple Choice

Refer to the following figure to answer the questions that follow.

-Which statement best describes the opportunity cost evident in the production possibilities frontier (PPF) for the corresponding figure?

• A) The law of increasing relative cost applies because the PPF is a straight line.
• B) The law of increasing relative cost applies because the PPF is bowed outward.
• C) The opportunity cost is constant because the PPF is a straight line.
• D) The opportunity cost is constant because the PPF is bowed outward.
• E) The opportunity cost decreases because the line has a negative slope.

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Definitions:

Frank Knight

An influential economist known for his work on risk, uncertainty, and the role of entrepreneurship in economic theory.

Joseph Schumpeter

An Austrian economist and political scientist known for his theories on business cycles and innovation. He introduced the concept of creative destruction, which describes how old industries are destroyed and replaced by new ones.

Karl Marx

A 19th-century philosopher, economist, and political theorist known for his critical theories about capitalism and advocacy for socialism.

Marginal Revenue Product

The Marginal Revenue Product indicates the additional revenue generated from employing one more unit of a resource, such as labor or capital.