If an Economy Is Operating Inside Its Production Possibilities Curve

question 22

Multiple Choice

If an economy is operating inside its production possibilities curve for consumer goods and capital goods, this means that it:

• A)can only produce more consumer goods by producing fewer capital goods.
• B)can only produce more capital goods by producing fewer consumer goods.
• C)can produce more of both consumer goods and capital goods by using its resources more efficiently.
• D)must improve its technology to produce more output.

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Definitions:

Direct Materials

Raw materials that are directly traceable to the manufacturing of a specific product.

Direct Labor-Hours

The total hours of work directly involved in manufacturing goods or providing a service.

Variable Overhead

The costs that fluctuate with the level of production output and may include expenses such as utilities and indirect materials.

Direct Materials

Raw materials that can be directly attributed to the manufacturing of a product.