On a production possibilities diagram, points inside the frontier are:
a. unattainable given existing technology and resources.
b. inefficient
c. efficient.
d. efficient but not necessarily desirable.
b
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You overhear the following in the hallway, "Everyone eventually dies, so how can a life insurance company make a profit? Isn't it a losing battle? You will always have to pay the death benefit to your clients!" You know that life insurance compa
can be profitable. This is because A) the premiums you pay on a life insurance policy are always more than any death benefit, so the insurance company always comes out ahead. B) older people with a greater probability of dying during the term of a policy are denied any death benefits. C) the insurance company collects more than enough in premiums today to cover expected benefits payable today. D) life insurance companies are notorious for cheating clients with "fine print" policy clauses.
Which of the following is not a method to internalize or adjust for externalities?
A. persuasion B. assignment of property rights C. unilateral transfers D. voluntary agreements
According to the liquidity premium theory, a steep yield curve may be an indicator of
A) expectations of a significant increase in inflation. B) an upcoming recession. C) an economic slowdown. D) lower future short-term interest rates.
An economic recession in Japan will cause the aggregate demand curve in the United States to shift to the right.
Answer the following statement true (T) or false (F)