If the Slopes of the Production Possibility Frontiers Involving Sugar

question 242

Multiple Choice

If the slopes of the production possibility frontiers involving sugar and rice in countries A and B are equal

• A) the opportunity cost of producing sugar is less in Country A.
• B) the opportunity cost of producing rice is less in Country B.
• C) specialization does not benefit either country.
• D) each country will produce identical quantities of sugar and rice.

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Definitions:

Contribution Margin Ratio

A financial metric that measures the proportion of sales revenue that exceeds variable costs, indicating how much of the revenue is available to cover fixed costs and generate profit.

Operating Income

Earnings from a company's principal business activity, excluding expenses and revenues from non-operational sources.

Operating Income

A measure of a company's earning power from ongoing operations, equal to revenues minus operating expenses, but before taxes and interest.

Margin Of Safety

Indicates the possible decrease in sales that may occur before an operating loss results.