Answer:
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Unemployment willl cause the production possibilities to shift inwards, so I the answer would be option A.
During massive unemployment period, production possibilities will heavily decrease due to the lower amount of capital and the lower amount of consumers for that potential product (which happen because the consumers lose a lot of its purchasing power). This situation will cause the curve to move inwards.
Answer:
Option A Net income will be the same under both variable and absorption costing.
Explanation:
The condition here given is:
Production Units = Sales units
Now under such conditions their is no finished goods and all the fixed costs are absorbed in the units produced in the absorption costing which means all the fixed production costs are part of the cost of goods sold.
In variable costing system, the fixed costs are not absorbed in the units and deducted as period cost.
So this means no cost is left which is not deducted from the revenue and this gives us net income that is same amount when we either use variable costing or use absorption costing. But remember that this is only possible when the production units are equal to sales units.
