Suppose That a Worker in Country a Can Make Either

question 78

Multiple Choice

Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Which of the following is true?

• A) In Country A, the opportunity cost of one iPhone is two iPads.
• B) In Country A, the opportunity cost of one iPad is two iPhones.
• C) The opportunity cost of iPads is lower in Country A than in Country B.
• D) In Country B, the opportunity cost of one iPhone is two iPads.

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Definitions:

Unit Selling Price

The amount of money charged to the customer for a single unit of product or service.

Contribution Margin

The difference between sales revenue and variable costs, representing the amount that contributes to covering fixed costs and generating profit.

Contribution

The portion of sales revenue that exceeds variable costs, contributing towards covering fixed costs and generating profit.

Machine Hour

A measurement of production time, quantifying the number of hours a machine is in operation during a given period.