If Production Involves Increasing Opportunity Cost, Then on the Production

question 195

Multiple Choice

If production involves increasing opportunity cost, then on the production possibilities frontier, moving to a point closer to the horizontal axis will increase the opportunity cost of

• A)the good that is shown on the horizontal axis.
• B)the good that is shown on the vertical axis.
• C)both of the goods shown on the axes.
• D)neither of the goods shown on the axes.

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Definitions:

Imputed Interest

The assumed interest rate used by the IRS for tax purposes on loans with little or no interest, to ensure that tax is collected on essentially interest-free loans.

Call Provision

A clause in a bond's contract that allows the issuer to redeem the bond before its maturity date under specific conditions.

Retire Bonds

The process of paying off or redeeming bonds before or at maturity to eliminate debt obligations.

Investing

The act of allocating resources, often money, in the hope of generating an income or profit in the future.