Suppose That a Bakeshop with 5 Employees Can Produce Both

question 22

Multiple Choice

Suppose that a bakeshop with 5 employees can produce both pies and cakes.In one day,if all resources are devoted to baking pies,the shop can produce 125 pies; if all resources are devoted to baking cakes,the shop can produce 50.What is the shop's opportunity cost of producing any one cake?

• A)0.4 pies
• B)0.25 pies
• C)2.5 pies
• D)0.4 cakes
• E)2.5 cakes

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Definitions:

Financing Activities

Transaction and events in a business's operations that involve obtaining resources from creditors and repaying those resources or obtaining capital from owners and providing them with a return on, and of, their investment.

Cash Dividends

Distributions of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in the form of cash.

Net Cash Flow

The variance between money coming in and going out of a business during a given timeframe.

Indirect Method

A cash flow statement approach that adjusts net income for changes in balance sheet accounts to identify cash flow from operating activities.