Assume Point a on a Linear Production Possibilities Curve Represents

question 149

Multiple Choice

Assume point A on a linear production possibilities curve represents the combination of 12 coffees and 3 cappuccinos, and point B represents 3 coffees and 6 cappuccinos. Suppose coffees are on the vertical axis and cappuccinos are on the horizontal axis. The opportunity cost of a cup of coffee is:

• A)3 cappuccinos.
• B)9 cappuccinos.
• C)1/3 of a cappuccino.
• D)6 cappuccinos.

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Definitions:

Capital Structure

The combination of borrowing (debt) and ownership (equity) capital employed by a firm to finance its activities and expansion.

Equity-Financed

The method of funding a business through the sale of shares, thus raising capital without incurring debt.

Fixed Asset Turnover

A financial efficiency ratio that measures how well a company utilizes its fixed assets to generate sales.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity.