If a Production Possibilities Schedule Appears as a Downward Sloping

question 41

Multiple Choice

If a production possibilities schedule appears as a downward sloping straight line,there occurs

• A) increasing opportunity cost
• B) decreasing opportunity cost
• C) constant opportunity cost
• D) negative opportunity cost

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Definitions:

Variable Cost

Costs that change in proportion to the level of goods or services that a business produces.

Variable Costing

A pricing approach that incorporates only variable production expenses—such as direct materials, direct labor, and variable manufacturing overhead—into the cost of products.

Absorption Costing

A costing method that assigns all manufacturing costs, both fixed and variable, to products.

Net Income

The total earnings of a company after subtracting all expenses from revenue.