The Seller of Product a Has No Idle Capacity and Can

question 76

Multiple Choice

The seller of Product A has no idle capacity and can sell all it can produce at $20 per unit.Outlay cost is $4.Assuming the seller can sell internally,what is the opportunity cost?

• A)$4
• B)$16
• C)$20
• D)$24

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Definitions:

Interest Rate

The proportion, in a percentage, at which interest is paid by borrowers for the use of money that they borrow from a lender. It is a critical component of the credit markets.

Years

A unit of time equal to 365 days (or 366 days in a leap year), used in calendar timekeeping.

Present Value

The value right now of a sum of money expected in the future or a sequence of cash inflows, factoring in a specific rate of return.

Discount Rate

This is the rate of interest utilized in the process of discounted cash flow analysis to calculate the current value of future cash flows.