Refer to the Production Possibilities Frontier in Figure 2

question 43

Multiple Choice

Refer to the production possibilities frontier in Figure 2.1.3.The opportunity cost of moving from C to B will be

• A)greater than moving from D to C but less than moving from B to A.
• B)less than moving from D to C but greater than moving from B to A.
• C)the same as moving from D to C or moving from B to A.
• D)greater than moving either from D to C or from B to A.
• E)less than moving from E to D.

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Definitions:

Compounded Semi-annually

The process of adding interest to the principal sum of a deposit or loan every six months, so that each subsequent interest calculation is based on the original principal plus all accumulated interest.

Ordinary Annuity

A series of equal payments made at equal intervals of time, with the first payment occurring at the end of the period.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return.

Compounded Quarterly

The method of calculating interest where the interest is added to the principal sum four times a year.