Production Possibilities Frontiers Are Typically Concave (Bowed Out)from the Origin

question 92

Multiple Choice

Production possibilities frontiers are typically concave (bowed out) from the origin because

• A) of the law of supply
• B) there is usually a one-for-one trade-off in resources used in production
• C) economies of scale enable firms to reduce the average costs of production as output rises
• D) the opportunity cost of a good rises as the quantity of the good produced increases
• E) resources are often left idle in the firm

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Definitions:

Net Income

The amount of earnings left after all expenses, taxes, and costs have been subtracted from total revenue.

FMV

Fair Market Value, an estimate of the market value of a property or asset, based on what a knowledgeable, willing, and unpressured buyer would likely pay to a knowledgeable, willing, and unpressured seller in the market.

Tax Depreciation

The deduction of a portion of the cost of a business asset from taxable income over the asset's useful life, as allowed by tax laws.

Taxable Income

The amount of income used to calculate how much tax an individual or a company owes to the government, after all deductions and exemptions.