Exhibit 2-9 Production possibilities curve
Which of the following moves from one point to another in Exhibit 2-9 would represent an increase in economic efficiency?
A. Z to W.
B. W to Y.
C. W to X.
D. X to Y.
Answer: D
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
For an inferior good, the income and substitution effects
A) work together. B) work against each other. C) can work together or in opposition to each other depending upon their relative magnitudes. D) always exactly cancel each other.
If the demand curve is unit elastic, this implies that:
a. consumers do not react to a change in product price. b. the good can only be purchased in units of 1. c. this good has no good substitutes. d. the good is a basic food staple. e. the percentage change in the quantity demanded = the percentage change in product price.
The United States has run large trade deficits with most of the world since the early
a. 1940s b. 1960s c. 1970s d. 1980s e. 1990s