Table 3-31 ​

question 389

Multiple Choice

Table 3-31
​
-Refer to Table 3-31. For the farmer, the opportunity cost of 1 pound of potatoes is

• A)0.625 pound of meat.
• B)1.0 pounds of meat.
• C)1.6 pounds of meat.
• D)3.2 pounds of meat.

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to covering fixed costs.

Fixed Costs

Expenses that do not change in total regardless of the level of production or sales activity, such as rent, salaries, and insurance.

Marginal Costs

The additional cost incurred by producing one extra unit of a product or service.

Economic Profits

Profits exceeding the opportunity costs of a next best alternative, measuring the extent to which a firm has generated excess returns over its costs, including the cost of capital.