A Country Produces Only Apples and Bananas

question 158

Multiple Choice

A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier,5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?

• A) 4 bananas
• B) 5/4 of a banana
• C) 4/5 of a banana
• D) 1 apple
• E) None of the above answers is correct.

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Definitions:

Net Operating Income

The profit generated from a company's everyday business operations, excluding expenses and revenues from non-operational activities.

Flexible Budget

A budget designed to adapt by varying in response to the company's activity levels or volume changes.

Revenue and Spending Variances

The difference between the budgeted and actual figures of revenue and expenditure, used for financial planning and control.

Manufacturing Overhead

All indirect costs related to the manufacturing process, excluding direct labor and direct materials.