Figure 1-7 Shows the Production Possibilities Boundary for an Economy

question 82

Multiple Choice

Figure 1-7 shows the production possibilities boundary for an economy that produces two goods - cotton and bananas. FIGURE 1-7
-Refer to Figure 1-7.A production possibilities boundary is shown for an economy that produces two goods - cotton and bananas,both measured in tonnes produced per year.If the economy moves from point C to point D,what is the opportunity cost of each extra tonne of bananas produced?

• A)0.036 tonnes of cotton
• B)0.36 tonnes of cotton
• C)3.6 tonnes of cotton
• D)36 tonnes of cotton
• E)360 tonnes of cotton

Calculate and interpret the marginal product of labor.

Identify and calculate fixed and variable production costs.

Recognize the concept and implications of diminishing returns to labor.

Determine the conditions under which a firm operates at the minimum point of average total cost (ATC).

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