The Graph Above Shows the Production Possibilities Curves for Two

question 18

Multiple Choice

The graph above shows the production possibilities curves for two hypothetical nations, Orin and Pohl, which each make two hypothetical products, jaxs and keps. Which of the following statements is correct?

• A) Orin has a comparative advantage in both jaxs and keps
• B) Pohl has a comparative advantage in jaxs
• C) The opportunity cost of making jaxs is lower in Orin than in Pohl
• D) Orin is more efficient than Pohl

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Definitions:

Special Order Decisions

These are considerations made by businesses to accept or decline an order from a customer that is not part of the company's standard line of production or services, often involving unique pricing or costs.

Short-Term Pricing

The strategy or approach to setting prices for goods or services with a focus on immediate or near-future objectives.

Absorption Costing

An accounting method that includes all manufacturing costs, both direct and indirect, in the cost of a product, thereby fully absorbing overhead.

Profit

The financial gain achieved when the revenue from sales or services exceeds the costs and expenses incurred in providing those sales or services.