-Suppose Puerto Rico and Hawaii Currently Have the Same Production

question 151

Multiple Choice

-Suppose Puerto Rico and Hawaii currently have the same production possibilities so that the above figure is the PPF for hotels and consumption goods in the two areas.Hotels are a capital good that,once built,will help produce still more consumption goods.If Puerto Rico produces more hotels than Hawaii,

• A) Hawaii's PPF will shift outward further than Puerto Rico's PPF.
• B) Hawaii's PPF will shift inward.
• C) Puerto Rico's PPF will not shift.
• D) Puerto Rico's and Hawaii's PPF will shift outward by the same amount.
• E) Puerto Rico's PPF will shift outward further than Hawaii's PPF.

---

Definitions:

Merchandise

Goods that are purchased for the purpose of being sold to customers in the retail environment.

Warranty Expense

A cost incurred by a company to repair or replace products during a specified period under warranty coverage.

Warranty Service

A promise from the seller or manufacturer to repair or replace defective products within a specified time period at no additional cost to the buyer.

Estimated Warranty Expense

An accounting provision representing the anticipated cost of honoring product warranties, calculated based on historical warranty data and sales forecasts.