If the Production Possibility Frontier Is a Straight Line

question 137

Multiple Choice

If the production possibility frontier is a straight line:

• A)opportunity costs are constant.
• B)firms face increasing costs.
• C)firms face decreasing costs.
• D)there is no trade-off between the two goods represented.

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Definitions:

Net Present Value

The difference between the present value of an investment project’s cash inflows and the present value of its cash outflows.

Discount Rate

The discount rate employed in the evaluation of discounted cash flow (DCF) to ascertain the current worth of prospective cash flows.

Overhaul Costs

Expenses associated with performing major maintenance or repairs to extend the life of an asset.

Salvage Value

The anticipated remaining worth of an asset when it reaches the end of its operational lifespan.