An Economy Produces Apples and Oranges

question 167

Multiple Choice

An economy produces apples and oranges.The dashed line in the figure below represents the production possibilities curve of this economy.Suppose a productivity catalyst in the form of improved agricultural technology is introduced in the economy.In this case,the production possibilities curve will ________.

• A) change to PPC 1
• B) change to PPC 2
• C) change to PPC 3
• D) remain unchanged

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Definitions:

Costs of Overstocking

Expenses related to holding excess inventory, including storage, insurance, and losses due to obsolescence or deteriorating items.

Costs of Understocking

Expenses incurred due to insufficient inventory levels, leading to lost sales, backorders, and potentially damaged customer relationships.

Cycle Service Level

A performance metric that measures the probability of meeting customer demand without stockouts within a given inventory cycle.

Profitability

A measure of the efficiency and effectiveness of a company's operations, indicated by its ability to generate income relative to revenue, assets, equity, or other financial metrics.