Which of the Following Is an Assumption Used When Drawing

question 218

Multiple Choice

Which of the following is an assumption used when drawing a production possibilities frontier?
i.Human wants and desires are limited to what is available.
ii.Only two goods are considered.
iii.The level of technology is fixed and unchanging.

• A) i only
• B) ii only
• C) i and iii
• D) ii and iii
• E) i, ii, and iii

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Future Value

Value of cash flows at a future date, taking into account interest accumulated between when the cash flow occurred and the future date.

Double-Declining Balance

An accelerated method of depreciation that doubles the rate at which an asset’s book value declines compared to straight-line depreciation.

Straight-Line Depreciation

A method of allocating the cost of an asset evenly over its useful life.