Table 2-1
​ -Refer to Table 2-1

question 244

Multiple Choice

Table 2-1
​
$$\begin{array}{l}\text { Production Possibilities }\\\begin{array} { | c | c | } \hline \text { Tennis Rackets } & \text { Tennis Balls } \\\hline 150 & 9,000 \\\hline 300 & 7,500 \\\hline 450 & ? \\\hline\end{array}\end{array}$$
-Refer to Table 2-1. If the production possibilities frontier is bowed outward, then which of the following could be the maximum number of tennis balls produced when 300 tennis rackets are produced?

• A)6,700.
• B)6,900.
• C)6,000.
• D)5,100.

Identify factors contributing to market efficiency.

Calculate the opportunity cost related to personal decisions and economic transactions.

Relate the concept of opportunity cost to production and service outsourcing decisions.

Define the scope of economics and its application to decision-making and resource allocation.

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Definitions:

Total Variable Costs

The sum of all costs that vary directly with the level of production or sales volume, such as materials and labor costs.

Variable Costing Income Statement

An income statement format that only includes variable costs as cost of goods sold and uses contribution margin to analyze profitability.

Absorption Costing Format

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Gross Margin

Gross margin is a company's net sales revenue minus its cost of goods sold, representing the efficiency of a company in managing its direct costs.