The Negative Slope of the Production Possibilities Curve Is a Graphical

question 61

Multiple Choice

The negative slope of the production possibilities curve is a graphical way of indicating that:

• A)any economy "can have its cake and eat it too."
• B)to produce more of one product we must accept less of another.
• C)the principle of increasing opportunity costs does not apply to the economy as a whole.
• D)consumers buy more when prices are low than they do when prices are high.

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Definitions:

Short-run Average Cost

The total cost divided by the quantity of output produced, in the short term when at least one input is fixed.

Long-run Average Cost

The per-unit cost of production in the long term, where all inputs can be varied and economies of scale can be achieved.

Substitution

Substitution refers to the economic principle where users replace one good or service with another in response to changes in price, technology, or consumer preferences.

Product Transformation Curve

Curve showing the various combinations of two different outputs (products) that can be produced with a given set of inputs.