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:

Perfectly Competitive

In a perfectly competitive market, there are many buyers and sellers, the products are homogenous, and no single entity can influence the market price.

Demand Rises

Occurs when there is an increase in the quantity of a good or service that consumers are willing and able to purchase at a given price.

Economic Profit

The disparity measure in between overall returns and full expenses, including both exposed and indirect costs.

Market Supply

The total amount of a product that sellers are willing and able to sell across all relevant price levels within a given market.