Question

question 7 (mandatory) (3.0303 points)
exhibit 1-7
refer to exhibit 1-7. a movement from point b to point d indicates
a) a gain in good x and a loss in good y.
b) a gain in both good x and good y.
c) a loss in both good x and good y.
d) no change in the production of good x or good y.
e) a gain in good y and a loss in good x.

Explanation:

The curve is a production possibilities frontier (PPF). Moving from Point B to Point D along the PPF means reallocating resources: as we move right along the Good X axis, the quantity of Good X increases, while moving down along the Good Y axis means the quantity of Good Y decreases.

Answer:

a) a gain in Good X and a loss in Good Y.