A production possibilities frontier has a downward slope because
A. increased production of one good always reduces the additional profit of production.
B. decreased production of one good is associated with lower profit from that good.
C. economists have a negative view of life and human nature.
D. increased production of one good always reduces production of the other.
E. increased production of one good necessarily causes production of other goods to increase.
Answer: D
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Knowledge workers are becoming more common relative to production workers
Indicate whether the statement is true or false
Between 1980 and 2005, the Vanguard Index Fund earned 12.3%/year, while the average mutual fund investor earned:
a. 1.9% b. 2.3%. c. 5.1%. d. 7.3%.
Assume a two-country, two-good, two-input model where the following relationships hold:(K/L)U.S. > (K/L)ROW(K/L)automobiles > (K/L)shoes (K/L)U.S. is the capital-labor ratio in the United States, (K/L)ROW is the capital-labor ratio in the Rest of the World, (K/L)automobiles indicates the capital-labor ratio in the production of automobiles, and (K/L)shoes indicates the capital-labor ratio in the production of shoes.Assume further that technology and tastes are the same in the United States and the Rest of the World. The relationships shown here indicate that, with no trade, in the United States
A. the relative labor endowment is higher than in the Rest of the World. B. the price of shoes relative to automobiles is lower than in the Rest of the World. C. the relative capital endowment is the same as in the Rest of the World. D. the price of automobiles relative to shoes is lower than in the Rest of the World.
If the labor force increases in size, which of the following would NOT occur?
A. The labor supply curve would shift to the right. B. The equilibrium wage would fall. C. The labor demand curve would shift to the right. D. The number of workers employed would rise.