The Concavity or Bowed-Out Shape of the Production Possibilities Frontier

question 228

Multiple Choice

The concavity or bowed-out shape of the production possibilities frontier is the result of

• A)the law of downward-sloping demand.
• B)the law of upward-sloping demand.
• C)the principle of increasing cost.
• D)complementarity in consumption.

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Definitions:

Lower Of Cost

Refers to a valuation principle that directs inventory and other assets to be recorded at the lower of either the original cost or the current market value.

Net Realizable Value

The estimated selling price of inventory in the ordinary course of business minus any estimated costs necessary to make the sale, used in determining the value of ending inventory.

Inventories

The total amount of goods and materials held by a company for the purpose of resale or production.