-In the Production Possibilities Frontier Depicted in the Figure Above

question 22

Multiple Choice

-In the production possibilities frontier depicted in the figure above, what is the opportunity cost of increasing the production of bananas from two million pounds to three million pounds?

• A) 1/2 hat per pound of bananas
• B) 1 hat per pound of bananas
• C) 2 hats per pound of bananas
• D) 3 hats per pound of bananas

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Definitions:

Economic Profits

The difference between the total revenue earned by a firm and the total costs of production, including opportunity costs.

Market Demand Curve

A graphical representation showing the total demand of all consumers in a market for a particular product at different prices.

Colluded

A situation where firms in a market agree to set prices or output levels to maximize collective profits, often at the expense of competition.

Marginal Cost

The financial implication of creating an extra unit of a product or service.