A Bowed Out Production Possibilities Frontier Shows

question 2

Multiple Choice

A bowed out production possibilities frontier shows

• A) that resources are equally productive in all uses.
• B) increasing opportunity cost.
• C) that resources are not equally productive in all uses.
• D) Both answers B and C are correct.
• E) Both answers A and B are correct.

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Definitions:

Productivity Growth

The increase in the efficiency of production, measured by the amount of goods and services produced per unit of input.

Unionized Workers

Employees who are members of a union, which is an organized association formed to protect and further their rights and interests.

Substitution Effect

The economic understanding that as prices rise or income decreases, consumers will replace more expensive items with less costly alternatives.

Income Effect

The change in an individual's or economy's purchasing power due to a change in income, affecting the quantity of goods and services bought.