Use the Following to Answer Question(s)

question 10

Multiple Choice

Use the following to answer question(s) :
Exhibit: Strawberries and Submarines

-(Exhibit: Strawberries and Submarines) As the economy moves from point A towards, say, point D, it will find that the opportunity cost of each additional submarine:

• A) falls.
• B) rises.
• C) remains unchanged.
• D) none of the above

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Definitions:

Marginal Cost

The increase in total cost that arises from producing one additional unit of goods or services.

Industrial Organization

A field of economics dealing with how firms' structures, strategies, and behaviors determine the nature and extent of competition.

Market Conditions

The current state of the economy and the supply and demand dynamics within a specific market.

Cost of Capital

The rate of return that a company must earn on its investment projects to maintain its market value and attract funds.