Use this link to access approaite figure: http://www.youtube.com/watch?v=Bu12MpY

Question

Use this link to access approaite figure: http://www.youtube.com/watch?v=Bu12MpYkgLg

This a multiple choice question, pick one answer (A-E)

Please explain why you pick an answer

24.

Consider the figure above, which describes a firm that can produce good X and good Y. Which of the following is true?

A)

The firm must produce outside the boundary.

B)

The firm will produce 10 units of X or 10 units of Y.

C)

The firm is able to produce 10 units of X or 10 units of Y.

D)

The firm must produce inside the boundary.

E)

The firm should produce 10 units of X and 10 units of Y.

24.

Consider the figure above, which describes a firm that can produce good X and good Y. Which of the following is true?

A)

The firm must produce outside the boundary.

B)

The firm will produce 10 units of X or 10 units of Y.

C)

The firm is able to produce 10 units of X or 10 units of Y.

D)

The firm must produce inside the boundary.

E)

The firm should produce 10 units of X and 10 units of Y.

Explanation / Answer

C) The firm is able to produce 10 units of X or 10 units of Y. is true because 10 units of x and 0 units of Y can be produce or 0 units of x and 10 units of Y ---- a) The firm must produce outside the boundary. is wrong because firm can't produce outside the boundary without more resource or a better method with less waste b) The firm will produce 10 units of X or 10 units of Y. is wrong because the firm could produce a mix i.e. 5 of x and 5 of y d) The firm must produce inside the boundary. is wrong because the firm could produce a amount on the boundary line i.e 5 of x and 5 of y e) The firm should produce 10 units of X and 10 units of Y. is wrong because that point would be outside the productivity boundary.

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