Refer to the Accompanying Figure

question 112

Multiple Choice

Refer to the accompanying figure. For the nation whose PPC is shown, it must be true that:

• A)the nation's productive resources are better-suited to making milk than to making movies.
• B)the nation's productive resources are better-suited to making movies than to making milk.
• C)some of the nation's productive resources are better-suited to making milk, and some are better-suited to making movies.
• D)the nation has a comparative advantage in making milk.

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Definitions:

Marginal Revenue

The boost in revenue achieved by selling an additional unit of a good or service.

Price Taker

A buyer or seller that is unable to influence the market price of a product or service.

Marginal Revenue Curve

A graphical representation showing how the revenue from selling one more unit of a good or service changes as production volume changes.

Price-searcher Firm

A company that has the ability to set the price for its products because it does not face perfect competition.