The slope of a typical production possibilities frontier reflects the fact that
A. some systems of market organization are more efficient than others.
B. the invisible hand always functions smoothly in a market system without government intervention.
C. when resources are allocated efficiently, it’s impossible to produce more of anything without producing less of something else.
D. production is only possible when resources are allocated efficiently.
Answer: C
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Refer to Figure 12.4. Since the housing bubble burst and the economy returned to its initial, pre-bubble level before the corrective policy changed output, the economy actually moved from ________ after the bubble burst
A) point A to point B B) point B to point D C) point A to point C D) point C to point B
Suppose a consumer's expected utility function given two possible states of nature A and B can be expressed in terms of consumption of food, F, in both states as U(FA, FB) = [0.6 × ln(FA)] + [0.4 × ln(FB)]. For this utility function, MUA is (0.6/FA) and MUB is (0.4/FB). Without insurance, the consumer can consume 200 in state A but only 50 in state B. The consumer can purchase insurance at a premium of 50 cents per dollar of benefit. Which of the following gives her budget line?
A. FA = 250 - FB B. FB = 250 - FA C. FA = 200 - FB D. FB = 50 - FA
Marginal social cost is made up of marginal private cost and external cost.
Answer the following statement true (T) or false (F)
Which of the following represents the true economic cost of production when firms produce goods that cause negative externalities?
A) the private cost of production B) the social cost of production C) the external cost of production D) the explicit cost of production