If the economy is producing at potential GDP, it is operating

a. on the Production Possibility Curve

b. below the Production Possibility Curve

c. above the Production Possibility Curve

d. doesn't have a Production Possibility Curve

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Related questions

For Ethiopia to increase its future economic growth it must choose a point that is

A. Below its production possibilities curve

B. Further along on its production possibility curve toward the capital goods axis.

C. Further along on its production possibility curve toward the consumption goods axis.

D.Above it's production possibility curve.

coralsalmon448

Question and Exercise 02-06

A country has the following production possibility table:

Resources Devoted to Clothing	Output of Clothing	Resources Devoted to Food	Output of Food
100%	20	0%	0
80	16	20	5
60	12	40	9
40	8	60	12
20	4	80	14
0	0	100	15

a. Draw the countryâs production possibility curve.

b. Whatâs happening to the trade-off between food and clothing?

	The trade-off between food and clothing is increasing.
	There is no trade-off between food and clothing.
	The trade-off between food and clothing is decreasing.
	The trade-off between food and clothing stays the same.

c. Say the country gets better at the production of food. What will happen to the production possibility curve?

The production possibility curve:

	shifts out along the clothing axis only.
	shifts out along both axes.
	shifts out along the food axis only.
	shifts in along the food axis only.

d. Say the country gets equally better at producing both food and clothing. What will happen to the production possibility curve?

The production possibility curve:

	shifts out along both axes.
	shifts in along both axes.
	shifts out along the food axis only.
	shifts out along the clothing axis only.

An economy produces hot dogs and hamburgers. If the discovery of the remarkable health benefits of hot dogs were to change consumer preferences, it would

a. expand the production possibility frontier.

b. contract the production possibility frontier.

c. move along the production possibility frontier.

d. move the economy inside the possibility frontier