Refer to the Figure Below

question 138

Multiple Choice

Refer to the figure below. At point D, the opportunity cost of making milk is:

• A)low because the economy is specializing in making milk.
• B)high because productive resources that are better-suited to making movies are not being used to make milk.
• C)high because productive resources that are better-suited to making movies are being used to make milk.
• D)high because the economy is not operating efficiently.

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Definitions:

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behaviors hold true.

Cost Behaviour

The manner in which a cost changes as the related activity level changes, classified into fixed, variable, and mixed costs.

Cost Report

A detailed financial document that outlines the actual costs incurred during a project or for business operations over a defined period, often used for tracking and controlling expenditures.

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behaviors are valid.