The law of increasing opportunity cost implies that
A) producing additional units of one good results in proportionately smaller reductions in output of the other good.
B) producing additional units of one good results in increasing amounts of lost output of the other good.
C) the production possibilities curve will be a straight line.
D) the society will be producing on its production possibilities curve.
Answer: B
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In equilibrium, with exports equal to imports it must be the case that
A) leakages equal injections. B) saving plus taxes equal government expenditures plus investment. C) total expenditures equal GDP. D) All of these.
If nominal GDP rises from one year to the next, then
What will be an ideal response?
Figure 10-8
Figure 10-8 displays the cost curves of a perfectly competitive firm. Profits at a price of $10 would be approximately
a.
$1 per unit.
b.
$3 per unit.
c.
$5 per unit.
d.
$10 per unit.
The buying and selling of foreign currency by the central bank is a trade policy whose objective is:
A. reducing purchases of assets abroad. B. stabilizing the exchange rate against external shocks. C. stabilizing the interest rate against foreign capital outflows. D. promoting long term economic growth.