Figure 2-4 Figure 2-4 Shows Various Points on Three

question 45

Multiple Choice

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation.
-Refer to Figure 2-4. Consider the following events:
a. an increase in the unemployment rate
b. general technological advancement
c. a decrease in consumer wealth

Which of the events listed above could cause a movement from X to V?

• A) a only
• B) a and b only
• C) b and c only
• D) a, b, and c

---

Definitions:

Net Present Value

A financial metric that calculates the value of a projected future cash flows relative to the initial investment, considering the time value of money.

Break-Even Time

The period required for a business to generate enough revenue to cover its total costs, reaching a financial state where profit and loss are exactly balanced.

Payback Period

The length of time it takes to recover the initial cost of an investment, calculated by dividing the investment cost by annual cash inflows.

Hurdle Rate

The lowest acceptable profit that a project or investment must generate to meet the requirements of a manager or investor.