A Situation in Which Some Resources Are NOT Fully Utilized

question 81

Multiple Choice

A situation in which some resources are NOT fully utilized is represented in a production possibilities frontier diagram by

• A) any point on either the horizontal or the vertical axis.
• B) the midpoint of the production possibilities frontier.
• C) a point outside the production possibilities frontier.
• D) a point inside the production possibilities frontier.

---

Definitions:

Internal Rate Of Return

A financial metric used to estimate the profitability of potential investments, calculated as the rate of return that makes the net present value of all cash flows from a particular project equal to zero.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment, calculated by subtracting the projected cash outflows from the present value of cash inflows.

Opportunity Cost

The cost of foregoing the second-best option when making a decision, representing the benefits that could have been received by taking a different action.

Make-Or-Buy Decision

A decision-making process used by businesses to determine whether to produce goods in-house or purchase them from an external supplier.