Smallville Has a Linear Production Possibility Frontier in the Production

question 316

Multiple Choice

Smallville has a linear production possibility frontier in the production of good X and good Y. It can produce 6 of X per hour or 8 of Y per hour. Suppose it has 240 hours of labor and divides labor hours equally between production of good X and good Y. What is the MAXIMUM amount of good Y it can produce?

• A)960
• B)30
• C)14
• D)6

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Definitions:

Cash Dividend

Cash rewards issued to investors of a certain class by a firm, as determined by the firm's board based on the company's profits.

Common Shares Outstanding

The number of shares that are currently owned by investors, including restricted shares owned by company officers and insiders.

Liabilities

Liabilities refer to the financial obligations or debts that a company owes, which must be paid to others.

Treasury Stock

Shares that were once part of the outstanding shares but were bought back by the company, reducing the amount of stock on the open market.