If Your Linear, Two-Good Production Possibilities Graph Has a Slope

question 27

Multiple Choice

If your linear, two-good production possibilities graph has a slope steeper than -1:

• A) you would have to give up more than one unit of the good measured on the horizontal axis to gain an additional unit of the good measured on the vertical axis.
• B) you would have to give up less than one unit of the good measured on the horizontal axis to gain an additional unit of the good measured on the vertical axis.
• C) by specializing in the good measured on the horizontal axis you would be able to make more total units than you would if you specialized in the good measured on the vertical axis.
• D) you have a comparative advantage in the good measured on the vertical axis.

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Definitions:

Assets

Resources owned by a company or individual, expected to bring future economic benefits.

Face Amount

The face amount is the value of a financial instrument, such as a bond or life insurance policy, as stated on the instrument itself.

Interest Payments

Payments made periodically, often annually or semi-annually, as compensation for borrowing money, calculated as a percentage of the total amount borrowed.

Bond Price

The market price for which a bond is bought or sold, influenced by interest rates, credit quality, and maturity.