Which of the following statements is not true regarding the production function and the production possibilities curve?
A. The production possibilities curve expresses the ability to produce various combinations of goods given the use of all resources.
B. A production function tells us the maximum amount of output attainable from the use of all resources.
C. Both the production function and the production possibilities curve maximize the amount of output attainable.
D. The production function describes the capacity of a single firm, whereas the production possibilities summarizes the output capacity of the entire economy.
Answer: B
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The value of one more unit of a good or service is its marginal benefit
Indicate whether the statement is true or false
If the economy is on the LM curve, but is to the left of the IS curve, aggregate output will ________ and the interest rate will ________
A) rise; rise B) rise; fall C) fall; rise D) fall; fall
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A) the marginal product of capital is low in poor countries. B) the rate of return on capital is low in poor countries. C) there should be large flows of capital from rich countries to poor countries. D) all of the above.