-Refer to Exhibit 2-1

question 25

Multiple Choice

-Refer to Exhibit 2-1.The opportunity cost of moving from point A to B is

• A) 10,000 units of butter.
• B) 20,000 units of butter.
• C) 20,000 units of guns.
• D) 10,000 units of guns.

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Definitions:

Marginal Costs

The added financial burden of creating one more unit of a product or service.

Average Costs

The total cost of production divided by the quantity produced, often used to evaluate production efficiency.

Fixed Costs

Costs that remain constant regardless of the level of production or sales activities, such as rent, salaries, and insurance premiums.

Marginal Costs

Marginal costs represent the change in total production cost that arises when the quantity produced is incremented by one unit, essentially the cost of producing one additional unit of a good.