ECONOMICS
ECONOMIC GROWTH
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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capacity.
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output.
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both capacity and output.
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neither capacity nor output.
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Detailed explanation-1: -The movement along a PPC from one point to another point indicates that more of one good is produced only by giving up production of the other good, assuming that resources are limited and constant.
Detailed explanation-2: -Points that lie strictly below the frontier/curve are inefficient, because the economy can produce more of at least one good without sacrificing the production of any other good, with existing resources and technology. Points that lie on the frontier/curve are efficient.
Detailed explanation-3: -The law of increasing opportunity cost tells us that, as the economy moves along the production possibilities curve in the direction of more of one good, its opportunity cost will increase.
Detailed explanation-4: -As you move from one efficient point on the production possibilities frontier (PPF) to another efficient point on the PPF, you experience (a) a decrease in relative cost. Relative cost is a term used to refer to the ratio between the price of one product and the price of another or a particular basket of goods.