Use the Following to Answer Question(s): Production Possibilities for Machinery

question 31

Multiple Choice

Use the following to answer question(s) : Production Possibilities for Machinery and Petroleum

-(Exhibit: Production Possibilities for Machinery and Petroleum.) Assuming constant costs in the neighborhood of their current levels of production, the exhibit shows the number of units of machinery each country would have to forgo in order to produce the additional petroleum indicated.The opportunity cost in Mexico of producing 210 units of petroleum is _______ units of machinery.

• A) 35
• B) 70
• C) 90
• D) 160

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Definitions:

Soybean Future

A standardized contract for the future sale or purchase of soybeans, traded on a commodities exchange.

Wheat Spot Price

The current market price at which wheat can be bought or sold for immediate delivery.

Profit

The financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Contango

A situation in futures trading where the future price of a commodity is higher than the spot price, often indicating expectations of rising prices.