Briefly discuss the implications of a country operating inside its production-possibility curve. Use a graph in your discussion.
What will be an ideal response?
POSSIBLE RESPONSE: The production-possibility curve (PPC) shows all combinations of the amounts of different products that an economy can produce with full employment of its resources and maximum feasible productivity of those resources.
The economy of Country A (above) produces two types of goods-consumer goods and capital goods. If the economy of Country A is operating at Point B inside the PPC it is not operating at peak efficiency. This may reflect unemployment or inefficient use of resources or both. It also implies that the country could produce more of both types of goods, or more of one of the goods without foregoing any production of the other type of good.
You might also like to view...
Regardless of market structure, all firms
A) consider the actions of rivals. B) maximize profit by setting marginal revenue equal to marginal cost. C) produce a differentiated product. D) have the ability to set price.
When a price ceiling which had been set below equilibrium price is removed, what happens next?
A. quantity supplied rises. B. quantity demanded falls. C. price rises. D. all of the choices.
What might happen to alligators in the south if the U.S. Fish and Wildlife Service were to reduce or eliminate the tags required to hunt alligators?
A. Over consumption, which could lead to less profit. B. Under consumption, which could lead to less profit. C. Under consumption, as hunters switch to a new animal to hunt. D. Over consumption, which could lead to extinction.
A tax whose burden, expressed as a percentage of income, falls as income increases is a
A. progressive tax. B. benefits-received tax. C. regressive tax. D. proportional tax.