If a country is operating at a point of production efficiency, ...

[kwoodring]

If a country is operating at a point of production efficiency,
 
  A) it operates on its trade line.
  B) it cannot be producing at its point of comparative advantage.
  C) it produces on its production possibilities frontier.
  D) it must specialize in the production of a good.
  E) it enjoys a free lunch when increasing production.

Question 2

What does the marginal propensity to consume measure and how is it related to the consumption function?
 
  What will be an ideal response?

[kjo;oj]

Answer to Question 1

C

Answer to Question 2

The marginal propensity to consume, or MPC, is the change in consumption expenditure divided by the change in disposable income. The MPC tells the proportion of any change in disposable income spent on consumption expenditure. The marginal propensity to consume is equal to the slope of the consumption function.