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Figure: Guns and Butter
-(Figure: Guns and Butter) Look at the figure Guns and Butter. If the economy is operating at point B, producing 16 guns and 12 pounds of butter per period, a decision to move to point E and produce 18 pounds of butter:
A)indicates that you can have more butter and guns simultaneously.
B)makes it clear that this economy has decreasing opportunity costs.
C)necessitates a loss of eight guns per period.
D)necessitates a loss of four guns per period.

Question

Use the following to answer questions :
Figure: Guns and Butter 
-(Figure: Guns and Butter) Look at the figure Guns and Butter. If the economy is operating at point B, producing 16 guns and 12 pounds of butter per period, a decision to move to point E and produce 18 pounds of butter:
A)indicates that you can have more butter and guns simultaneously. 
B)makes it clear that this economy has decreasing opportunity costs. 
C)necessitates a loss of eight guns per period. 
D)necessitates a loss of four guns per period.

Quizplus · Accepted Answer

The movement from point B to point E represents a trade-off between guns and butter. To produce 18 pounds of butter, the economy must give up 8 guns.

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