Table 2-7 Table 2-7 Shows the Output Per Month of Month

question 227

Multiple Choice

Table 2-7
Table 2-7 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles.
-Refer to Table 2-7.What is Fred's opportunity cost of making a pogo stick?

• A) 1/3 unicycle
• B) 3 unicycles
• C) 6/7 pogo stick
• D) 1/2 unicycle

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Definitions:

Net Present Value

Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.

Variable Operating Expenses

Operating costs that fluctuate with changes in the volume of production or sales, like raw materials and direct labor costs.

Fixed Operating Costs

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

Variable Costs

Costs that change in proportion to the level of activity or volume of goods produced.