Consider the Production Possibilities Frontier Displayed in the Figure Shown

question 40

Multiple Choice

Consider the production possibilities frontier displayed in the figure shown.Which of the following statements is true? The opportunity cost of one watermelon:

• A)will decrease as more watermelons are produced.
• B)is constant.
• C)will increase as more watermelons are produced.
• D)is zero at point C.

---

Definitions:

Hedge Risk

A strategy or financial instrument used to offset potential losses or gains that may be incurred by a companion investment.

Option Positions

Refers to the holding of options contracts, including call and put options, as part of an investment strategy or portfolio.

Stock Price

The cost of purchasing a share of a company, determined by the supply and demand in the stock market.

Forward Contract

A financial contract between two parties to buy or sell an asset at a predetermined future date and price.