If a country is producing efficiently and is on the production ...

[Mr.Thesaxman]

If a country is producing efficiently and is on the production possibilities frontier, producing more of one good would result in a movement along the frontier.
 
  Indicate whether the statement is true or false

Question 2

Explain why any firm must generate enough revenue to cover its variable costs in the short run.
 
  What will be an ideal response?

[juwms]

Answer to Question 1

TRUE

Answer to Question 2

The reason is that if it can't cover its variable cost it is better off for the firm to shut down. At least under this circumstance the maximum amount the firm would lose would be an amount equal to its fixed costs. However, if a firm continued to produce even while revenues were short of variable costs this would result in greater losses than the losses associated with shutting down.