Poland Requires 4 Hours of Labor to Produce 1 Ton

question 30

Multiple Choice

Poland requires 4 hours of labor to produce 1 ton of coal and 1 hour of labor to produce a bushel of wheat. The Czech Republic requires 6 hours of labor to produce 1 ton of coal and 1 hour of labor to produce a bushel of wheat. What is the opportunity cost of coal in Poland?

• A) 0.25 hours of labor per ton of coal
• B) 0.25 bushels of wheat per ton of coal
• C) 4 hours of labor per ton of coal
• D) 4 bushels of wheat per ton of coal

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Definitions:

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment by summing the present values of all cash inflows and outflows associated with the investment.

Tax Credit

A direct reduction of the tax liability, not merely a reduction of taxable income.

Variable Cost

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production inputs, which vary with the level of output.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the amount of goods or services produced, such as rent or salaries.