Suppose a Gardener Produces Both Tomatoes and Squash in His

question 120

Multiple Choice

Suppose a gardener produces both tomatoes and squash in his garden.If the opportunity cost of one bushel of squash is 2/5 bushel of tomatoes,then the opportunity cost of 1 bushel of tomatoes is

• A)2/5 bushel of squash.
• B)5/2 bushels of squash.
• C)2 bushels of squash.
• D)5 bushels of squash.

---

Definitions:

Accounting Rate of Return

A financial ratio that measures the return on investment from a project based on its net income.

Time Value of Money

The concept that money available today is worth more than the same amount in the future due to its earning capacity.

Net Present Value

The variance between the current worth of incoming cash and the current worth of outgoing cash throughout a specific time frame.

Cost of Capital

The rate of return a company must earn on its investment projects to maintain its market value and attract funds.