Use a Production Possibility Frontier to Show How Resources Can

question 80

Essay

Use a production possibility frontier to show how resources can be allocated in an economy.

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Definitions:

High-low Method

A cost accounting technique used to estimate variable and fixed costs based on the highest and lowest levels of activity within a given period.

Variable Cost

Costs that vary directly with the level of production or sales volume. They include raw materials, labor directly involved in production, and sales commissions.

Total Fixed Costs

The sum of all costs that remain constant regardless of the level of production or sales.

Mixed Cost

Mixed Cost refers to expenses that have both fixed and variable components, changing in total with activity level but also containing a static portion that remains constant.