Suppose That Opportunity Costs Are Constant and That Fred Can

question 252

Multiple Choice

Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day. Ethel can either produce a maximum of eight pies or two cakes in a day. Fred's opportunity cost to produce one cake is

• A) one-half pie.
• B) two pies.
• C) six pies.
• D) four pies.

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Definitions:

Warranty of Authority

An assurance given by an agent that they have the actual authority to act on behalf of the principal, protecting the third party in contractual agreements.

Sole Proprietorships

A business structure where a single individual owns and operates the business, taking full responsibility for its debts and obligations.

Business Registration

The process of officially recording a new business with the relevant governmental authority.

Express or Implied Agreement

A mutual understanding between parties to a contract where terms are specifically stated (express) or suggested by actions or circumstances (implied).