In an Edgeworth Production Box Diagram,if Two Isoquants Intersect,it Means

question 21

Multiple Choice

In an Edgeworth production box diagram,if two isoquants intersect,it means that:

• A)the well-being of the two consumers can be improved without changing the output of either good.
• B)the marginal rate of substitution between consumers does not equal the marginal rate of technical substitution.
• C)by allocating inputs differently between firms,output can be increased at no additional cost.
• D)consumers are not facing the same output price ratio.

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Definitions:

Purchasing Power

The ability of an individual or group to buy goods and services with a given amount of money.

Bank Account

A financial account maintained by a financial institution for a customer, allowing the customer to deposit and withdraw money, and in many cases, earn interest.

Nominal Interest Rates

The interest rates unadjusted for inflation, reflecting the rate of time-preference for current goods over future goods in monetary terms.

Real Interest Rates

Interest rates adjusted for inflation, reflecting the true cost of borrowing and the real yield for lenders.