An Increase in General Resources That Affects the Production of Both

question 52

Multiple Choice

An increase in general resources that affects the production of both goods on a production possibilities frontier (PPF) would cause an

• A) inward shift of the PPF.
• B) outward shift of the PPF.
• C) outward rotation along the x axis.
• D) outward rotation along the y axis.
• E) increase in opportunity cost.

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Definitions:

Overhead Cost

The ongoing, general business expenses not directly tied to producing goods or services but necessary for running the business.

Traditional Costing

A costing method that assigns factory overhead to products based on volume-related measures such as direct labor hours or machine hours.

Product B

A generic term used to differentiate one product from another in a specific context, often used for analysis, comparison, or as an example.

Direct Labor-Hours

The total hours of labor directly involved in manufacturing a product, often used as a basis for allocating overhead costs.