The following production possibilities table represents an economy which is producing two products, tanks and autos.Refer to the table, in moving from possibility C to D, the cost of a tank in terms of autos is:
A)50
B)100
C)200
D)300

Question

The following production possibilities table represents an economy which is producing two products, tanks and autos.Refer to the table, in moving from possibility C to D, the cost of a tank in terms of autos is: 
A)50 
B)100 
C)200 
D)300

Quizplus · Accepted Answer

Moving from possibility C to D, the production of one additional tank requires a sacrifice of 100 autos (400-300=100). Therefore, the cost of a tank in terms of autos is 100. This is higher than the cost of a tank in terms of autos in possibility A (50) and possibility B (75). So, the best choice would be to produce at possibility C, where both tanks and autos are being produced efficiently.

The Following Production Possibilities Table Represents an Economy Which Is