What Is the Production Possibilities Frontier

question 70

Multiple Choice

What is the production possibilities frontier?

• A) a map that shows the frontier beyond which technological innovation is unprofitable
• B) a map that shows areas of the world in which capitalist production is highest
• C) a graph that shows the various combinations of resources that can be used to produce a given level of output
• D) a graph that shows the various combinations of output the economy can possibly produce given the available resources and technology

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Definitions:

Activity

Refers to any action or task performed within an organization that consumes resources.

Relevant Range

The range of activity over which a company expects its operating assumptions, such as cost behavior and sales mix, to remain valid, influencing budgeting and financial planning.

Fixed Costs

Costs that do not vary with the level of production or business activity, remaining constant even when output changes.

Variable Cost

Expenses that change in proportion to the activity or volume of business.