Consider the Production Possibilities Frontier in the Figure Shown

question 43

Multiple Choice

Consider the production possibilities frontier in the figure shown. The opportunity cost of moving from point A to point B is:

• A) 5 cars per cigar.
• B) 10 cars per cigar.
• C) 5 cigars per car.
• D) 10 cigars per car.

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Definitions:

Standard Price

Standard price is a predetermined cost assigned to materials and goods, used in budgeting and costing calculations.

Actual Price

The real price at which a transaction takes place, unaffected by any discounts or premiums.

Variable Budget

A budget that adjusts spending levels based on changes in actual revenue or other financial indicators.

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production supplies.