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:

Revenues

The total amount of money received or expected to be received by a company from its business activities, such as the sale of goods or services, before any expenses are deducted.

Expenses

Costs incurred in the process of earning revenue; general operational costs of a business.

Operating Revenue

Revenue earned from a company’s primary business activities, excluding items like investment revenue.

Car Dealership

A business that specializes in the sale of new or used cars.