The Production Possibilities Boundary Shows Possible Combinations of Guns and Butter

question 41

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 (b) on the production possibilities boundary,producing units of butter.We can say that this economy is ________ efficient because ________.

• A)allocatively; guns and butter are both produced to the point where the marginal cost to producers equals the marginal value to consumers
• B)productively; the marginal cost of production across guns and butter is equated
• C)allocatively; the price of guns is equal to the price of butter
• D)productively; the economy is operating at a point inside the production possibilities boundary
• E)allocatively; the economy is operating at a point on the production possibilities boundary

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Definitions:

Sales Response Function

A model that illustrates the relationship between sales and marketing efforts, demonstrating how changes in marketing strategies affect sales.

Vertical (Y) Axis

The axis in a coordinate plane that typically represents the dependent variable in a graph, running perpendicular to the horizontal (X) axis.

Horizontal (X) Axis

The line on a graph that runs horizontally, often used to represent the independent variable in data presentations.

Incremental Revenues

Additional revenue generated from new sales activities or strategies, beyond existing income streams.