Figure 2.1.2 -Consider the Production Possibilities Frontier in Figure 2.1.2.Which of the of the Following

question 136

Multiple Choice

Figure 2.1.2
-Consider the production possibilities frontier in Figure 2.1.2.Which of the following statements is false?

• A)Points inside the production possibilities frontier indicate wasted or misallocated resources.
• B)The opportunity cost of producing X increases as production of X increases.
• C)The opportunity cost of producing Y increases as production of Y increases.
• D)Resources are not equally useful in the production of X and Y.
• E)Production at point A shifts the production possibilities frontier outward.

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Definitions:

Operating Income

A measure of a company's profitability from its regular business operations, excluding income and expenses from unusual or non-operational activities.

Absorption Costing

An accounting method that includes all manufacturing costs (both fixed and variable) in the cost of a product.

Operating Income

Earnings from a company's core business operations, excluding expenses and revenues from investments and other non-operational activities.

Variable Costing

An accounting method that only allocates variable production costs to products, excluding fixed costs.