Assume a Society Can Produce Either Olives or Grapes

question 129

Multiple Choice

Assume a society can produce either olives or grapes. If the marginal rate of transformation of bushels of olives into bushels of grapes is 0.2, then the opportunity cost of grapes is

• A) the 5 bushels of olives that must be forgone.
• B) the 5 bushels of grapes that must be forgone.
• C) the 0.2 bushels of olives that must be forgone.
• D) the additional 0.2 gallons of olives that can be produced.

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life.

Double-Declining-Balance

A method of accelerated depreciation which doubles the normal depreciation rate.

Scrap Value

An estimated calculation of what an asset will be worth at the time it is sold, after it is no longer useful.

Sum-Of-The-Years-Digits

An accelerated method of depreciation which totals the digits of an asset's useful life and allocates the cost based on a fraction of those digits.