If the Production Possibilities Frontier Between Bottled Water and Water

question 11

Multiple Choice

If the production possibilities frontier between bottled water and water in a jug is a straight line, which of the following statements would be correct?

• A) A large amount of unemployment must exist.
• B) Producing more of one good gives the economy a free lunch.
• C) There is no tradeoff between the two goods.
• D) Resources are equally productive at producing either product.
• E) There is no decrease in the production of one good when the production of the other is increased.

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Definitions:

Equivalent Units

A concept used in cost accounting to express the amount of work or materials in terms of fully completed units of output.

Conversion

The process of changing the physical or chemical properties of a material or resource into a new form, often referring to the manufacturing phase where raw materials are transformed into finished goods.

Processing Department

A processing department is a specific division or section within a manufacturing facility where a distinct stage of production is completed, often part of a sequential process in producing a finished good.

Completed

refers to goods or products that have undergone all stages of production and are ready for sale or distribution.