Figure 2-3 -Refer to Figure 2-3.Sergio Vignetto Raises Cattle and Llamas on Cattle

question 252

Multiple Choice

Figure 2-3

-Refer to Figure 2-3.Sergio Vignetto raises cattle and llamas on his land.A portion of his land is more suitable for raising cattle, and the other portion is better suited for raising llamas.Which of the graphs in Figure 2-3 represent his production possibilities frontier that displays increasing opportunity costs?

• A)Graph A
• B)Graph B
• C)Graph C
• D)either Graph A or Graph C
• E)either Graph B or Graph C

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Definitions:

ATC

Average Total Cost; the total cost of production divided by the total output produced.

Economic Profits

The remaining amount after deducting total expenses from the total income, taking into account all direct and indirect costs.

Profit Maximizes

A strategy or objective of businesses to achieve the highest possible profit, where total revenue exceeds total costs by the largest margin.

MR

Short for Marginal Revenue, it represents the additional income earned from selling one more unit of a good or service.