Generally, on a Linear Two-Good Production Possibilities Curve, the Opportunity

question 111

Multiple Choice

Generally, on a linear two-good production possibilities curve, the opportunity cost of the good measured on the vertical axis is:

• A)one minus the opportunity cost of the good measured on the horizontal axis.
• B)the reciprocal of the opportunity cost of the good measured on the horizontal axis.
• C)the absolute value of the slope of the production possibilities curve.
• D)the negative of the opportunity cost of the good measured on the horizontal axis.

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Definitions:

Canadian Dollars

The official currency of Canada, abbreviated as CAD, used for all transactions within the country.

Spot Rate

The immediate market value at which a particular currency can be acquired or disposed of.

Forward Contract

A financial derivative that represents a contract between two parties to buy or sell an asset at a specified future date for a price that is agreed upon today.

Fair Value Hedge

A hedging strategy used to mitigate risk by matching the fair value of an asset or liability through a financial derivative.