Figure 2-15 -Refer to Figure 2-15. Consider the Production Possibilities Frontier for Possibilities

question 20

Multiple Choice

Figure 2-15
-Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. When society moves from point A to point B,

• A) the opportunity cost is the same as when society moves from point B to point C.
• B) it is giving up cars to get sofas.
• C) the opportunity cost is increasing.
• D) it moves from an inefficient point to an efficient point.

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Definitions:

Imports

Goods and services purchased from other countries for domestic consumption, often contrasted with exports.

Reaction Function

In economics, it represents how one economic agent's decision changes in response to another's action, especially in competitive markets or games.

Demand Function

A mathematical representation showing the relationship between the quantity demanded of a good and its price, along with other determinants.

Marginal Cost

Additional cost incurred by increasing product or service production by one unit, emphasizing the concept of incremental expenditure.