In Terms of the Production Possibility Frontier, an Increase in Productivity

question 176

Multiple Choice

In terms of the production possibility frontier, an increase in productivity attributable to new technology would best be shown by

• A) a movement along the frontier.
• B) the production possibility frontier shifting outward, away from the origin.
• C) a movement from a point inside the frontier to a point on it.
• D) a movement toward the origin.

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Definitions:

Circular Flow Diagram

The circular flow diagram is an economic model that shows how money moves through an economy between producers and consumers, illustrating the continuous flow of goods and services and financial transactions.

Revenue

The income that an organization receives from its normal business activities, usually from the sale of goods and services.

Insurance

A contractual arrangement providing financial protection against losses or damages from specific risks, in exchange for premium payments.

Tolerance for Risk

is the degree to which an individual, investor, or organization is willing to endure uncertainty and potential losses in pursuit of potential gains.