Consider a Graph of a Production Possibilities Curve

question 95

Multiple Choice

Consider a graph of a production possibilities curve. If a producer is operating at an inefficient point, then that producer:

• A)cannot produce more of one good without giving up some of the other good.
• B)can produce more of one good without producing less of the other good.
• C)must be at an unattainable point on the production possibilities curve.
• D)must be specializing in activities for which it has a comparative advantage.

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Definitions:

Bottleneck Operations

Stages in the production process that limit the overall output because they have a lower capacity compared to other stages.

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted, indicating how much contributes to covering fixed costs and generating profit.

Constrained Resources

Resources that limit the company's ability to produce goods or services, often resulting in bottlenecks in the production process.

Opportunity Cost

The benefit, profit, or value of something that must be given up to acquire or achieve something else.