I do believe that the proposal should be accepted. The reason being the Clark project has a positive NPV. The net present value method offsets the present value of an investment’s cash inflows against the present value of the cash outflows. If the present value of cash inflows exceeds the present value of cash outflows‚ then it clears the minimum cost of capital and is deemed to be a suitable undertaking. On the other hand‚ if the present value of cash inflows is less than the present value of cash
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Date: Topic: Production Possibilities & Opportunity Cost 1. The slope of the production possibility frontier shows A. the technically efficient combinations of the two goods B. how factor inputs must be changed to keep them fully employed C. the opportunity cost of one good in terms of the other D. how consumers are willing to trade one good for another 2. A. OM B. OH C. YF D. MH 3. Which of the following will not shift a country’s production possibilities frontier outward?
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Outline how the production possibility frontier can be used to demonstrate opportunity cost and examine how the effects of unemployment and technical change on production in the economy. A production possibility frontier is a basic model that can examine the efficiency of an economy’s resource use‚ irrespective of the wants of that economy. A production possibility frontier is the simplest tool usable to demonstrate opportunity cost‚ at all possible combinations of two goods in production‚ the extremes
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macroeconomics known as the Production Possibility Frontier is simple to understand. It is a method used to represent (in the form of a graph) the point in which an economy is producing its goods and services with efficiency. It also shows whether the economy is allocating their resources in the best way possible. If the economy is not producing the quantities indicated by the PPF‚ resources are not being managed efficiently and the production will decrease. The production possibility frontier also shows
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Ralph T. Byrns Modern Microeconomics 2001 © Chapter 8 The Costs of Production Production and Costs Costs in the Short Run Fixed Costs Implicit Costs Explicit Costs Variable Costs Average Costs Marginal Costs The Symmetry Between Production and Costs Total Product and Total Cost Curves Geometry of Average and Marginal Costs Curves Average Physical Product and Average Variable Costs Marginal Physical Product and Marginal Cost Costs in the Long Run Isocost Lines Cost Minimization The
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Production-possibility frontier In economics‚ a production-possibility frontier (PPF) or “transformation curve” is a graph that shows the different quantities of two goods that an economy (or agent) could efficiently produce with limited productive resources. Points along the curve describe the trade-off between the two goods‚ that is‚ the opportunity cost. Opportunity cost here measures how much an additional unit of one good costs in units forgone of the other good. The curve illustrates that
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COST OF PRODUCTION CONTENTS 1. Introduction 2. Types of costs 3.1 Opportunity‚ implicit and explicit costs 3.2 Fixed and variable costs 3.3 Average costs 3. Types of cost curves 4.4 Marginal cost curve 4.5 Average cost curves 4. Costs in Short run and in the Long run 5.6 Short run 5.7 Long run 5.8 Economies of scale 5. Cost analysis in the real world 6.9 Economies of scope 6.10 Experiential
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Production Possibilities Curve (PPC) The Production Possibilities Curve (PPC) is used to show the economic concepts of scarcity‚ choices and opportunity cost. The PPC is a graphical representation showing maximum combinations of output (goods and services)‚ a nation can produce with limited economic resources in a fixed period time. Assumptions of the production possibilities curve: I. Only 2 goods will be illustrated II. The amount of resources is fixed III. State of technology
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Question 2 Show the PPF curve under decreasing and increasing returns to labour. The Production possibility frontier analyses the most efficient use of company resources to achieve different levels of production of output. Labour is one of the variables factors of production. One unique feature of the PPF is that one alternative is usually foregone in order to maximize the production of another product‚ for example‚ in a refinery a manager may decide to deploy more human resources to produce
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Costs of Production July 2011 Topics to be Discussed Measuring Cost: Which Costs Matter? How do Cost Curves Behave? – Cost in the Short Run – Cost in the Long Run How to Minimize Cost? How to draw Implications for Business Strategy? Topics to be Discussed Production with Two Outputs: Economies of Scope Dynamic Changes in Costs: The Learning Curve Estimating and Predicting Cost Measuring Cost: Which Costs Matter? Accountants tend to take a retrospective view of firms’ costs‚ whereas
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