The Following Table Shows the Production Possibilities for the Country

question 39

Multiple Choice

The following table shows the production possibilities for the country of Erewhon:

-Refer to the table above to answer this question.If Erewhon is producing combination D,what is the cost of producing 1 more unit of cheese?

• A)3/4 of a unit of wine
• B)1 1/3 units of wine
• C)6 units of wine
• D)8 units of wine

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs, which contributes to covering fixed costs and generating profit.

Fixed Costs

Costs that do not change with the level of output or activity, such as rent or salaries.

Financial Advantage

A benefit gained in terms of monetary gains or improved financial position, often resulting from investments, operational efficiency, or strategic decisions.

Fixed Expenses

Costs that do not change with the level of production or sales activity, such as rent, salaries, and insurance.