Use the Following to Answer Questions

question 28

Multiple Choice

Use the following to answer questions :
Figure: Production Possibility Frontier
-(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. If the economy is operating at point B, producing 16 cars and 12 computers per period, a decision to move to point E and produce 18 computers:

• A)indicates that you can have more computers and more cars simultaneously.
• B)makes it clear that this economy has decreasing opportunity costs.
• C)entails a loss of 8 cars per period.
• D)entails a loss of 4 cars per period.

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Definitions:

Allocation Mechanism

The process or system used to determine how resources are distributed and goods and services are allocated in an economy.

Incentive Function

A principle or mechanism designed to motivate individuals or entities to act in a desired manner by offering rewards or consequences.

Productive Resource

Any resource used in the creation of goods and services, including land, labor, and capital.

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, resulting in market balance.