-Figure 2-5 Shows Five Different Points Along the Production Possibilities

question 17

Multiple Choice

-Figure 2-5 shows five different points along the production possibilities frontier for a country that produces rockets and cruise ships.If the country is currently operating at point C and decided to move to point B,

• A) the opportunity cost would be four rockets
• B) it could not do so,given the current state of technology and quantity of resources
• C) the country would have to forego producing six cruise ships
• D) the opportunity cost would be four cruise ships
• E) the opportunity cost would be six rockets

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Definitions:

Variable Cost

A cost that varies with the level of output or activity, in contrast to fixed costs, which remain constant regardless of activity.

Fixed Costs

Expenses that do not change with changes in the volume of production or sales, such as rent, salaries, and insurance.

Break-Even Point

The point at which total costs and total revenues are equal, resulting in no net loss or gain.

Monthly Profit

The total revenue of a business minus the total expenses for the month, indicating the financial gain.