The Closer We Are to the Production Possibilities Frontier and the Farther

question 177

Multiple Choice

The closer we are to the production possibilities frontier and the farther away we are from the origin,

• A)the more unemployment there is.
• B)the less unemployment there is.
• C)the only way to produce more guns will be to give up some butter production.
• D)the only way to produce more butter will be to give up some gun production.

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Definitions:

Annual Fixed Costs

The total fixed costs incurred by a business in a year, including rent, salaries, and insurance, which do not vary with production volume.

Financial Advantage

The benefit gained in a financial context that puts an individual, company, or country in a better position than others.

Fixed Production Costs

Expenses that do not change with the level of production, such as rent, salaries, and equipment leasing.

Unit Product Cost

The calculated cost of producing a single unit of product, including direct materials, labor, and overhead costs.