If Production in the Economy Is Efficient, Then Changes in Market

question 48

Multiple Choice

If production in the economy is efficient, then changes in market prices

• A) Move us along the perimeter of the production possibilities curve.
• B) Move us to a point above the production possibilities curve.
• C) Move us from a point below the production possibilities curve to a point on the production possibilities curve.
• D) Have no effect on our position on the production possibilities curve.

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Definitions:

Direct Method

A method for preparing a cash flow statement where cash receipts and payments are reported directly, without using adjustments for non-cash items.

Selling Expense

Costs incurred to sell a product, including advertising, sales commissions, and other expenses directly related to the sales process.

Administrative Expense

Costs associated with the general administration of a business, such as salaries of executive officers, legal fees, and office supplies.

Investing Activities

Activities related to buying and selling long-term assets and various investments, which appear in a firm's statement of cash flows.