Which of the Following Is Assumed in Constructing a Typical

question 160

Multiple Choice

Which of the following is assumed in constructing a typical production possibilities curve?

• A)the economy is using its resources inefficiently.
• B)resources are perfectly shiftable among alternative uses.
• C)production technology is fixed.
• D)the economy is engaging in international trade.

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Definitions:

Profitable Use

The utilization of resources or assets in a way that generates a financial gain.

Fixed Manufacturing Overhead

Costs in manufacturing that do not vary with the level of production, such as salaries of supervisors and rent of the factory.

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted; it contributes towards covering fixed costs and generating profit.

Direct Labor

The wages paid to workers who physically produce products or are directly involved in providing services.