A Production Possibilities Curve Illustrates

question 288

Multiple Choice

A production possibilities curve illustrates

• A) scarcity.
• B) market prices.
• C) consumer preferences.
• D) the distribution of income.

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Definitions:

Variable Costing

A costing method that includes only the variable manufacturing costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.

Unit Product Cost

The total cost (both variable and fixed) to produce a single unit of product.

Contribution Format

A type of income statement that separates variable costs from fixed costs to calculate a company's contribution margin.

Absorption Costing

A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a product.