Use the Following to Answer Question(s): Production Possibilities in Alphaland

question 97

Multiple Choice

Use the following to answer question(s) : Production Possibilities in Alphaland and Omegaland

-(Exhibit: Production Possibilities in Alphaland and Omegaland) The slopes of the production possibilities curves (PPCs) in the two countries are:

• A) determined by the slopes of tangents drawn to the PPCs.
• B) always positive.
• C) a reflection of the fixed costs of production.
• D) not comparable since they each have their own PPC.

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Definitions:

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production.

Fixed Costs

Expenses that do not vary with the level of production or business activity within a certain range.

Price Elastic

A measure of how much the demand for a product or service changes in response to a change in its price.

Sales Volume

The number of units of a product or service sold by a company in a specified period.