Suppose That a Bakeshop with 5 Employees Can Produce Both

question 92

Multiple Choice

Suppose that a bakeshop with 5 employees can produce both pies and cakes.In one day,if all resources are devoted to baking pies,the shop can produce 125 pies; if all resources are devoted to baking cakes,the shop can produce 50.What is the shop's opportunity cost of producing any one pie?

• A)125 pies
• B)0.4 cakes
• C)2.5 pies
• D)0.4 pies
• E)50 cakes

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Definitions:

Natural Rate

The long-term unemployment rate that is observed once the effect of short-term cyclical factors has been removed and is thought to be due to structural factors in the economy.

Bureau of Labor Statistics

A government agency that collects, analyzes, and disseminates essential economic information to support public and private decision-making.

Natural Rate

The rate of any economic variable, such as unemployment or interest, believed to be inherent when the economy is in equilibrium.

Economic Policy

A course of action that is intended to influence or control the behavior of the economy, including taxation, government budgets, and interest rates.