Exhibit 2-6 Production Possibilities Curve Data

question 107

Multiple Choice

Exhibit 2-6 Production possibilities curve data

• A) the quantity of capital goods produced must be less than 150.
• B) the quantity of consumer goods is constant for each change in the quantity of capital goods produced.
• C) greater amounts of capital goods must be sacrificed to produce each additional unit of consumer goods.
• D) the amount of consumer goods produced must be greater than zero.

	A	B	C	D	E	F
Capital goods	150	140	120	90	50	0
Consumer goods	0	20	40	60	80	100

In Exhibit 2-6, the concept of increasing opportunity costs is represented by the fact that:

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Definitions:

Going Concern

An assumption that a company will continue to operate in the foreseeable future, without the intention or necessity of liquidation.

Financial Restructuring

The process of reorganizing a company's financial structure through various means, including changing the mix of debt and equity.

Capital Structure

The mixture of debt and equity that a company uses to finance its operations and growth.

Tax Shield

The reduction in income taxes that result from taking a deductible expense, such as mortgage interest, which reduces taxable income.