The General Rule for Allocating a Productive Resource Efficiently Across

question 42

Multiple Choice

The general rule for allocating a productive resource efficiently across different production activities of the same product, like fishing boats in the text case example, is to choose the allocation for which the

• A)Average product of the resource is the same in every activity
• B)Marginal product of the resource is the same in every activity
• C)Total product of the resource is the same in every activity
• D)Average product is equal to the marginal product in every activity

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Definitions:

Money Supply

The total amount of money available in an economy at a particular time, including cash, coins, and balances held in checking and savings accounts.

Expected Price Level

This term represents the anticipated average price of goods and services in an economy over a certain period.

Potential GDP

The maximum possible level of output an economy can achieve when all resources are utilized efficiently, without causing inflation.

Prices

The amount of money required to purchase goods or services, acting as a signal in the market to influence supply and demand.