A Point on the Frontier of the Production Possibilities Curve

question 19

Multiple Choice

A point on the frontier of the production possibilities curve is:

• A) attainable and the economy is efficient.
• B) attainable,but the economy is inefficient.
• C) unattainable and the economy is inefficient.
• D) unattainable,but the economy is efficient.

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Definitions:

Break-even Point

The point at which total costs and total revenues are equal, meaning no net loss or gain has been made.

Fixed Cost

Expenses that do not change with the level of goods or services produced by a business, such as rent or salaries.

Variable Cost

Costs that change in proportion to the level of goods or services that a business produces.

Fixed Cost

Expenses that do not change in total regardless of the level of output or activity in a business, such as rent, salaries, and loan payments.