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:

Cash

Liquid assets that are readily available for immediate use in transactions or to cover short-term liabilities.

Short Position

A trading strategy that involves selling a borrowed asset with the expectation that its price will fall, allowing it to be bought back at a lower price.

Long Position

An investment strategy where an investor buys securities with the expectation that their value will rise.

Loss

This occurs when expenses exceed revenues, or when the selling price of an asset is less than its purchase price, resulting in a negative financial outcome.