Refer to the Diagram Below

question 7

Multiple Choice

Refer to the diagram below.This production possibilities curve is constructed such that:

• A)resources are presumed to be perfectly shiftable between bread and tractors.
• B)the opportunity cost of bread diminishes as more bread is produced.
• C)the opportunity cost of tractors diminishes as more bread is produced.
• D)the opportunity cost of both bread and tractors in terms of each other increases as more of each is produced.

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Definitions:

Implicit Cost

The opportunity cost equal to what a firm must give up in order to use resources it already owns, without having to pay rent or purchase them.

Capital

Economic resource that is used in the production of goods and services. It includes tools, buildings, machinery, and equipment.

Either-Or Decision

A decision-making process that involves choosing between two mutually exclusive options or paths.

Implicit Cost

The opportunity cost equal to what a firm must give up in order to use resources it already owns, not directly involving monetary payment.