For Each Watch Switzerland Produces,it Gives Up the Opportunity to Produce

question 44

Multiple Choice

For each watch Switzerland produces,it gives up the opportunity to produce 50 pounds of cheese.Germany can produce one watch at a cost of 100 pounds of cheese.Which of the following is true?

• A)The opportunity cost of producing watches is lower in Switzerland.
• B)The opportunity cost of producing cheese is lower in Switzerland.
• C)The opportunity cost of producing watches is the same in both countries.
• D)It is impossible to compare costs because the two countries are not the same size.
• E)In Germany,the cost of a pound of cheese is one watch.

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Definitions:

Variable Expenses

Costs that change in proportion to the level and nature of business activity, such as advertising, sales commissions, and shipping costs.

Cost Volume Profit Analysis

A managerial accounting technique used to determine the effects of changes in costs and volume on a company's profits.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating how much each unit contributes to covering fixed costs and generating profit.

Break-Even Point

The production level at which total revenues equal total expenses, and there is neither profit nor loss.