Choco Fantasy is a irm that produces both dark chocolates as well as iquor choco

Question

Choco Fantasy is a irm that produces both dark chocolates as well as iquor chocolates. It can produce 10,000 bars of dark chocolate per month if all ts esources are used to produce only this using all its resources in the production of liquor chocolates, the fem can produce 8,000 bars per month. However, during a given month, the fim produces both varieties variety Similarly Which of the following, if true, would suggest that the fiem is operating on its PPF? 2 A. Even though the demand for both liquor and dark choooiates has increased, the company can inereethe producion d orty one vaty B. Most domestic consumers pre er he better quaity Swiss chocolates mporied by te outy OC The opportunity 0ostofshi ing resouroes from the production of liquor choc ates to dark chocolates is margnal D. Medca, reports earier this year ndcated that higher chocolate consumpton increases te nesk of heart attack. OE. In an aftempt to cut costs, the company is planning to fire its unproductive resources

Explanation / Answer

Answer:- The correct option is (A) that is, Even though the demand for both liquor and dark chocolates has increased, the company can increase the production of only one variety. Because If the firm is operating at a point on its PPF this means it is producing efficiently. If it wants to increase the quantity of one variety then it must decrease the quantity of other.

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