-In Exhibit GG-2, if it takes 5 units of food to provide a minimal standard of living, which economy, if any, faces a vicious circle of poverty (and why) ?
A) Ronilla, because it ends up at position B, which generates 5 units of per capita capital investment
B) Magar, because it ends up at position A, which generates no capital goods
C) neither faces the vicious circle because they can both produce 5 units of per capita food
D) neither faces the vicious circle because they can both makes choices along their production possibilities curve
E) both face the vicious circle because at some point on their production possibilities curve, they produce a per capita capital investment that combines with less than 5 units of per capita food
Correct Answer:
Verified
