Production Possibilities Tables for Two Countries, North Cantina and South

question 141

Multiple Choice

Production possibilities tables for two countries, North Cantina and South Cantina: North Cantina
Production possibilities (alternatives)
South Cantina
Production possibilities (alternatives)
Refer to the above tables.If North Cantina is producing at production alternative B, the opportunity cost of the eleventh unit of consumer goods will be:

• A)10 units of capital goods.
• B)¹/₄ of a unit of capital goods.
• C)8 units of capital goods.
• D)¹/₈ of a unit of capital goods.

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Definitions:

Average-cost Method

The average-cost method is an inventory costing method that assigns an average cost to each item in inventory, used to determine the cost of goods sold and ending inventory values.

Weighted-average Cost Method

This inventory costing method assigns a weighted average cost to each unit in inventory, used to calculate cost of goods sold and ending inventory.

Lower-of-cost-or-market

An accounting principle that states assets should be recorded at the lower value of either its cost or its market value.

Specific Identification

An accounting method used to track and assign costs to individual inventory items.