The Figure Given Below Shows the Production Possibilities Frontier for Mufflers

question 49

Multiple Choice

The figure given below shows the production possibilities frontier for mufflers and socks. If society moves from point c to point d, then society:

• A) gains 100 socks.
• B) loses 30 mufflers.
• C) is worse off after the change in production.
• D) is not operating efficiently.
• E) experiences some unemployment of resources.

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Definitions:

Unfavourable Price Variance

The difference between the actual price paid for something and its standard cost, when the actual price is higher.

Price Variance

The difference between the actual cost of a good or service and its standard or expected cost.

Product Costs

The total costs incurred to create a product, which include direct materials, direct labor, and manufacturing overhead.

Financial Accounting

The field of accounting focused on the summary, analysis, and reporting of financial transactions relating to a business.