Figure 19-3 Illustrates the Determination of an Efficient Output Mix

question 54

Multiple Choice

Figure 19-3 illustrates the determination of an efficient output mix in a two good economy.The output combination is represented by point Z and the consumption point of a representative consumer is W.The slope of the line zz represents the marginal rate of transformation [MRT].
In Figure 19-3,at point Z:

• A)the MRT_XY is greater than the MRS_XY.
• B)the opportunity cost of producing an additional unit of good X equals 2 units of good Y.
• C)the resources in the economy are being used inefficiently.
• D)the slope of the production possibility frontier is greater than the slope of the line zz.

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Definitions:

Esther Duflo

A French-American economist known for her research in development economics and for being the youngest person and the second woman to receive the Nobel Prize in Economic Sciences.

Abhijit Banerjee

An Indian-American economist who, along with Esther Duflo and Michael Kremer, won the Nobel Prize in Economic Sciences in 2019 for their work in development economics.

Extremely Poor

Individuals or households whose income level is significantly below the poverty line, making it difficult to meet basic needs.

Opportunity Cost

The economic consequence of bypassing the immediate superior alternative in decision-making.