Use the Following to Answer Questions

question 127

Multiple Choice

Use the following to answer questions :
Figure: Production Possibilities and Circular-Flow Diagram
-(Figure: Production Possibilities and Circular-Flow Diagram) Look at the figure Production Possibilities and Circular-Flow Diagram. Assume the two figures represent the same economy. Suppose that in the circular-flow diagram most firms undergo a significant increase in productivity. This results in a significant increase in the output of both coconuts and fish. If all other variables remain unchanged, then the adjustment in this economy would be best represented in the production possibilities figure by a movement from point A toward:

• A)point A (no movement).
• B)point B (a decrease in coconut production and an increase in fish production).
• C)point C (a decrease in coconut production).
• D)point D (an outward shift of the entire curve).

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Definitions:

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A graphical user interface element where users can input or select a date.

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