A Point Inside a Production Possibilities Frontier

question 204

Multiple Choice

A point inside a production possibilities frontier

• A) could indicate that resources are misallocated.
• B) is more efficient than a point on the production possibilities frontier.
• C) reflects the fact that more technology needs to be developed to fully employ all resources.
• D) implies that too much labor and not enough capital is being used.

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Definitions:

Operating Cycle

The operating cycle is the duration of time that takes for a company to purchase inventory, sell it to customers, and collect the cash from the sales.

Accounts Receivable

Outstanding payments due to a firm from its customers for delivered goods or services awaiting payment.

Cost of Goods Sold

The total direct costs attributed to producing goods, including materials and labor, which are sold during a certain period.

Total Asset Turnover

A financial ratio that measures a company’s effectiveness in using its assets to generate sales revenue.