Consider the Production Possibilities Frontier Displayed in the Figure Shown

question 141

Multiple Choice

Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one scarf is largest between:

• A)points A and B.
• B)points B and C.
• C)points C and D.
• D)points A and D.

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Definitions:

Constant Returns

A situation in production where increasing the quantity of inputs results in a proportional increase in the quantity of outputs, indicating a stable relationship between inputs and outputs.

Scale

refers to the size of a business operation or the capacity of a company's production output.

Production Function

An equation or model that describes the relationship between inputs (like labor and capital) and outputs (goods or services) in the production process.

Capital

Assets or wealth, whether in the form of money or other resources, that are used or invested to generate income.