The Existence of Increasing Opportunity Cost

question 74

Multiple Choice

The existence of increasing opportunity cost

• A)explains why specialization is frequently useful.
• B)explains why resources are scarce.
• C)explains the bowed-out shape of the production possibilities frontier.
• D)follows from the existence of property rights.
• E)explains why some societies produce inside their production possibilities frontier.

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Definitions:

Present Value

The worth today of money expected to be received in the future or sequences of cash inflows, utilizing a specific return rate.

Compound Value

The future value of an investment, including the principal and the compounded interest over time.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window. Alternatively, it can represent the rate used to discount future cash flows in present value calculations.

Present Value

The today's worth of future money or cash flow sequences, when a certain rate of return is applied.