A Point Lying Inside (Under) a Production Possibilities Frontier Indicates

question 197

Multiple Choice

A point lying inside (under) a production possibilities frontier indicates that

• A)the economy is saving money.
• B)there are no associated opportunity costs.
• C)more output could be produced with existing resources.
• D)technology limits production.

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Definitions:

Variable Expense

Costs that vary depending on a company's production volume or activity level.

Target Profit

The anticipated profit figure set by a business for a given period, often guiding pricing and production decisions.

Monthly Fixed Expense

Expenses that do not vary with production volume or business activity level, incurred on a monthly basis.

CM Ratio

Contribution margin ratio, showing the portion of sales revenue that is not consumed by variable costs and contributes to covering fixed costs.