When an Economy Is Operating Inside Its Production Possibilities Frontier,we

question 171

Multiple Choice

When an economy is operating inside its production possibilities frontier,we know that

• A)there are unused resources or inefficiencies in the economy.
• B)all of the economy's resources are fully employed.
• C)economic growth would have to occur in order for the economy to move to a point on the frontier.
• D)in order to produce more of one good,the economy would have to give up some of the other good.

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Definitions:

Operating Cycle

The time period between purchasing raw materials and collecting cash from selling finished goods, measuring the efficiency of a company's operations and cash flow.

Extraordinary Item

Unusual and infrequent gains or losses on a company's financial statements, not expected to recur in the foreseeable future, a concept that has been phased out in many accounting standards.

Income Statement

A report detailing a business's income and outgoings within a set timeframe, culminating in a final profit or loss.

Period Costs

Expenses recognized in the income statement in the period they are incurred, not directly tied to the production process and therefore not inventoriable.