If an Edgeworth Production Box for Two Industries,with Land and Labor

question 93

Multiple Choice

If an Edgeworth production box for two industries,with land and labor as the inputs,has a contract curve that is same as the diagonal of the box,we can infer that:

• A)land is being substituted for labor in production of both the commodities.
• B)the production possibility frontier is a 45-degree line from the origin.
• C)both industries are increasing cost industries.
• D)the proportion of land to labor used in producing the two goods is the same.

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Definitions:

Annual Rate

The interest rate for a whole year, as opposed to a shorter period, such as monthly or quarterly.

Compounded Annually

The calculation of interest on the original principal and the accumulated interest of prior periods, applied once per year.

Quarterly Payments

Payments made four times a year at three-month intervals, often used in loan repayments.

Semi-Annually Compounded

Refers to the process of calculating and adding interest to a principal sum twice a year.