Refer to the Above Figure

question 222

Multiple Choice

Refer to the above figure. The shape of the production possibility curve indicates that production of

• A) wheat is characterized by increasing costs while the production of beans is characterized by decreasing costs.
• B) wheat is characterized by decreasing costs while the production of beans is characterized by increasing costs.
• C) both goods are characterized by increasing costs.
• D) both goods are characterized by decreasing costs.

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Definitions:

Net Income

The amount of profit remaining after all expenses, taxes, and costs have been deducted from total revenue.

Break-even Point

The point at which cost or expenses and revenue are equal, resulting in neither profit nor loss.

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials.

Fixed Costs

Expenditures that do not change over a short period of time, regardless of the level of production or activity.