The Production Possibilities Boundary Shows Possible Combinations of Guns and Butter

question 92

Multiple Choice

The production possibilities boundary shows possible combinations of guns and butter that can be produced by a country.The lower diagram shows demand and supply for butter. FIGURE 12-2
-Refer to Figure 12-2.Suppose demand and supply for butter are shown by D and S,respectively.And suppose the economy is at point (a) on the production possibilities boundary.Is this output of guns and butter allocatively efficient?

• A)No,because the marginal value to consumers of the butter produced is greater than the marginal cost to producers.
• B)No,because the marginal cost to producers of the butter produced is more than the marginal value to consumers.
• C)Yes,because all points on the production possibilities boundary are allocatively efficient.
• D)Yes,because the marginal cost of producing the butter equals the marginal value of consuming the butter.
• E)No,because the marginal costs for guns and butter are not equated.

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Definitions:

Morals

Principles or habits with respect to right or wrong conduct, often influenced by cultural, religious, or personal beliefs.

Rule Deontology

An ethical theory that stresses the importance of following universal rules or duties in ethical decision-making, regardless of the consequences.

Utilitarianism

A moral philosophy that evaluates the morality of actions based on their outcomes, emphasizing the greatest good for the greatest number of people.

Greatest Good

A principle, often associated with utilitarianism, that actions are right in proportion as they tend to promote the overall happiness or welfare of the greatest number of people.