If she bakes only cookies, Opportunity costs apply to allocating resources in production.In economics, the production possibility frontier (PPF) refers to the point of allocating resources and producing goods and services in the most efficient way possible. Let's say you own a landscaping company and you add several brand-new lawn mowers to your business for $3,000. B) eggs but not ham. If the opportunity cost for a producer to produce a good is lower than for another producer, this means that he has a comparative advantage in producing that good. Countries tend to have different opportunity costs of producing a specific good, either because of different climates, geography, technology, or skills. The terms of trade refers to: the opportunity cost of producing a good. Question: When an economist uses the term 'cost' referring to a firm, the economist refers to the: A) opportunity cost of producing a good or service, which includes both implicit and explicit cost. B. The law of increasing opportunity costs says that, as we produce more of a particular good, the opportunity cost of producing that good increases. … If you are producing 600 tons of agricultural products per year, what is the maximum amount of manufactured products you can produce per year? Fixed and Variable Costs 7. The opportunity cost of producing an additional coffee mug would be lowest at: A. the quantity of a good demanded by U.S. consumers at a market- clearing price. 153. Refer to the production possibility curve for Ricardia below. In particular, its slope gives the opportunity cost of producing one more unit of the good in the x-axis in terms of the other good (in the y-axis). The following question refers to the table below, which shows the maximum number of goods X and Y that producers A and B can produce in one day. The graph indicates that with the resources and technology it has available, Ricardia: can produce either 40 units of rye or 20 units of eggs. Cost Type # 1. Financial costs of all the factors of production used to produce a good or service. 26) Refer to Figure 2.1. D) They Have An Absolute Advantage. A simple way to view opportunity costs is as a trade-off. Value of the best alternative given up when a good or service is produced. Explain D) ... names a particular good to which the tariff applies, while an ad valorem tariff applies to large classes of products . Opportunity cost is also known as alternative cost or displacement cost or transfer cost. Answer to The opportunity cost of producing a particular good refers to ___. D) neither ham nor eggs. A. Types of opportunity costs Explicit costs. B. B. they might be biased. The cost incurred on the next best alternative that is foregone to acquire or produce a particular good is known as opportunity cost. b. if the sum of the costs of producing a particular good rises by a specified percent, the price of that good must rise by a greater relative amount. Essentially, opportunity cost is all about comparing one production option to another production option. Investopedia defines opportunity cost as the cost of an action not taken in order to pursue a particular course of action. Production Costs 5. Money Costs: Money cost is also known as the nominal cost. The lower opportunity cost can be described as the ability of a nation to specialize in producing a particular good or service from a limited amount of resources. D) applies only to imports, while an ad valorem tariff applies only to exports. A) both eggs and ham. Theory of comparative advantage refers to the ability of a given nation to produce goods and services, not at a lower cost per unit, but at a lower opportunity cost compared to the other nations. Question 9 (1 Point) Saved The Opportunity Cost Of Producing A Particular Good Refers To: A) How Much Of A Good Can Be Produced With The Existing Technology And Resources. It is nothing but the expenses incurred by a firm to produce a commodity. A) 0.8 pounds of ham B) 1.25 pounds of ham C) 8 pounds of ham D) 16 pounds of ham. 10000, and then it will be called the money cost of producing 200 chairs. Real Cost: The term “real cost of production” refers to the physical quantities of various factors used in producing a commodity. Which good(s) does Finland have an absolute advantage producing? Price formation relies on the interaction of supply and demand to reach or approximate an equilibrium where unit price for a particular good or service is at a point where the quantity demanded equals the quantity supplied. Increasing the production of a particular good will cause the price of the good to remain constant. In an economic model, agents have a comparative advantage over others in producing a particular good if they can produce that good at a lower relative opportunity cost or autarky price, i.e. 1. A. Producers faced with limited resources must choose between various production scenarios. The individual with the lowest opportunity cost of producing a particular good from BU 1003 at James Cook Question: C) They Have The Lowest Opportunity Cost. B) The Total Cost Of Production, Including Wages, For All Units Of The Good. In this way, opportunity cost is a relative measure of costs. Amount of resources used to produce a good or service. Increment and Sunk costs The increment costs are the additions to costs resulting from a change in product lines, introduction of a new product, replacement of obsolete plant and machinery, etc. Countries tend to have different opportunity costs of producing a specific good, either because of different climates, geography, technology or skills. Definition: Opportunity cost refers to the value of the other choice sacrificed while choosing a better or suitable alternative.It is also termed as alternative cost. Fixed Costs or Supplementary Costs 8. 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