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Suppose an Economy Produces Milk and Honey, and Milk Is

Question 97

Multiple Choice

Suppose an economy produces milk and honey, and milk is plotted along the horizontal axis of the production possibilities frontier. The MRT is 2 at the current point of production. If the amount of milk produced is reduced by two units in order to produce one more unit of honey, then:


A) the new point of production lies above the production possibilities frontier.
B) the new point of production lies on the production possibilities frontier.
C) the new point of production lies below the production possibilities frontier.
D) we cannot determine where the new point of production lies relative to the production possibilities frontier.

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