Refer to the Following Table to Answer the Next Two

question 110

Multiple Choice

Refer to the following table to answer the next two questions.

-Which statement best describes the opportunity cost evident in the production possibilities frontier (PPF) for the accompanying figure?

• A) The law of increasing relative cost applies because the PPF is a straight line.
• B) The law of increasing relative cost applies because the PPF is bowed outward.
• C) The opportunity cost is constant because the PPF is a straight line.
• D) The opportunity cost is constant because the PPF is bowed outward.
• E) The opportunity cost decreases because the line has negative slope.

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Definitions:

Shut Down

A short-term decision by a firm to cease production due to unfavorable market conditions, without permanently exiting the market.

Total Cost

A rephrased definition: The aggregate expenditure associated with the manufacture or delivery of products or services, encompassing variable, fixed, and any additional costs.

TVC

Total Variable Cost, the total of all costs that vary with the level of output.

Total Revenue

The entire amount of income generated by the sale of goods or services related to a company's primary operations.