According to the Principle of Increasing Opportunity Cost, Expanding Production

question 71

Multiple Choice

According to the principle of increasing opportunity cost, expanding production requires using resources in which order?

• A) In random order.
• B) Starting with the resource with the highest opportunity cost and progressing to the lower opportunity cost resources.
• C) Starting with the resource closest to the average opportunity cost, then progressing to higher opportunity cost resources.
• D) Starting with the resource with the lowest opportunity cost and proceeding to the higher opportunity cost resources.

Recognize the accounting treatments for natural resources including depletion.

Understand the specifics of gain or loss recognition on the exchange of plant assets.

Learn the principles behind including or excluding certain costs when acquiring assets.

Comprehend the financial reporting requirements for plant and intangible assets.

---

Definitions:

Treasury Bills

Short-term government securities issued at a discount from the face value and mature in one year or less, representing a secure, low-risk investment option.

Optimal Weights

The most efficient proportion of different assets in an investment portfolio, aiming to maximize returns and minimize risk.

Expected Rate

The anticipated return or yield on an investment or financial instrument over a certain period.

Real Holding-period Return

The total return on an investment, accounting for inflation, over the period it is held, reflecting the true increase in purchasing power.