Use the Following to Answer Questions

question 43

Multiple Choice

Use the following to answer questions :
-(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. Which of the following is TRUE?

• A)The opportunity cost of crude oil is lower in the United States than in Mexico.
• B)The opportunity cost of crude oil is higher in the United States than in Mexico.
• C)Crude oil costs are the same in the United States and in Mexico.
• D)Tractor costs are the same in the United States and in Mexico.

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Definitions:

Marginal Revenue

The increase in income from selling an additional unit of a good or service.

Perfect Competition

A market structure characterized by a large number of small firms, identical products, and freedom of entry and exit, leading to price-taking behavior.

Monopoly

A market structure characterized by a single seller, selling a unique product in the market. The seller faces no competition, as he is the sole seller of goods with no close substitute.

Average Cost

This is the total cost divided by the number of goods produced, representing the cost on average for each unit produced.