Figure 7-15
-In Figure 7-15, we would expect a move along the production indifference curve from A to B if
A)the price of machines falls.
B)the price of labor falls.
C)output falls.
D)the product price rises.

Question

Figure 7-15 
-In Figure 7-15, we would expect a move along the production indifference curve from A to B if
A)the price of machines falls. 
B)the price of labor falls. 
C)output falls. 
D)the product price rises.

Quizplus · Accepted Answer

A move along the production indifference curve from A to B indicates an increase in the use of capital (machines) relative to labor. This would occur if the price of machines falls, making them relatively cheaper compared to labor. Therefore, choice A is the best answer.

Figure 7-15 -In Figure 7-15, We Would Expect a Move Along the Move