When Moving Along a Production Possibilities Curve, the Opportunity Cost

question 105

Multiple Choice

When moving along a production possibilities curve, the opportunity cost to society of getting more of the good on the horizontal axis:

• A) is constant.
• B) is measured in dollar terms.
• C) is measured by the amount of the other good that must be given up.
• D) usually decreases.

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Definitions:

Variable Costing

A cost accounting method that includes only variable production costs in unit product costs, and treats fixed costs as period expenses that are charged against revenue in the period they are incurred.

Variable Costs

Costs that change in proportion to the level of goods or services a business produces.

Variable Costing

An accounting method that only includes variable production costs (costs that change with output level) in the cost of goods sold and inventory valuation.