-The Table Above Lists Six Points on the Production Possibilities

question 14

Multiple Choice

$$\begin{array} { | c | c | } \hline \begin{array} { c } \text { Cheese } \\\text { (tons) }\end{array} & \begin{array} { c } \text { DVDs } \\\text { (thousands) }\end{array} \\\hline 0 & 60 \\\hline 2 & 56 \\\hline 4 & 48 \\\hline 6 & 36 \\\hline 8 & 20 \\\hline 10 & 0 \\\hline\end{array}$$
-The table above lists six points on the production possibilities frontier for cheese and DVDs.What is the opportunity cost of producing the 7th ton of cheese?

• A) 16 DVDs per ton of cheese
• B) 8 DVDs per ton of cheese
• C) 20 DVDs per ton of cheese
• D) 28 DVDs per ton of cheese

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Definitions:

Industry Supply Curve

A graphical representation showing the quantity of a good or service that producers are willing and able to supply at various prices.

Marginal Cost Curves

A graphical representation that shows how the marginal cost of producing an additional unit changes with the quantity produced.

AVC

Average Variable Cost, which is the variable cost per unit of output.

Long-run Equilibrium

A state in which all factors of production and costs are variable, leading to a situation where economic profits have been normalized or eliminated due to competition.