Figure 3-2

-Refer to Figure 3-2.For Jerry,the opportunity cost of 1 pound of cones is
A)1/3 pound of ice cream.
B)2/3 pound of ice cream.
C)3/2 pounds of ice cream.
D)2 pounds of ice cream.

Question

Figure 3-2
 
-Refer to Figure 3-2.For Jerry,the opportunity cost of 1 pound of cones is
A)1/3 pound of ice cream. 
B)2/3 pound of ice cream. 
C)3/2 pounds of ice cream. 
D)2 pounds of ice cream.

Quizplus · Accepted Answer

Jerry's opportunity cost of 1 pound of cones is the amount of ice cream he must give up to produce 1 pound of cones. In this case, it is the slope of the production possibilities frontier, which is -2/3. This means for every pound of cones produced, Jerry must give up 2/3 pound of ice cream. Therefore, the best choice for Jerry is to produce at point B where he produces 4 pounds of cones and 2 pounds of ice cream, which is the point on the production possibilities frontier with the highest amount of both goods.

Figure 3-2 -Refer to Figure 3-2.For Jerry,the Opportunity Cost of 1 Pound