If the Production Possibilities Curve Is a Straight Line

question 206

Multiple Choice

If the production possibilities curve is a straight line:

• A)the two products will sell at the same market prices.
• B)economic resources are perfectly shiftable between the production of the two products.
• C)the two products are equally important to consumers.
• D)equal quantities of the two products will be produced at each possible point on the curve.

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Definitions:

Sensitivity of EPS

The degree to which a company's earnings per share (EPS) is affected by fluctuations in its operating income.

ROE

A measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.

Target Capital Structure

The optimal mix of debt, preferred stock, and common equity that a company aims to maintain for financing its operations.

Debt-equity Ratio

A gauge of how shareholders' equity and debt proportionately finance a company’s assets.